The Financial Resolution and Deposit Insurance Bill, 2017 (FRDI), seeks to create a framework for resolving bankruptcy in financial firms (such as banks and insurance companies). The Bill repeals the Deposit Insurance and Credit Guarantee Corporation Act, 1962 and amends 12 other laws.

The Bill was introduced as a specialized law in order to create a framework for effective resolution of financial firm and to tide over multiple regulatory agencies with overlapping authorities.

In this context, the Financial Resolution and Deposit Insurance Bill, 2017 was introduced in Lok Sabha on August 10, 2017. The Bill seeks to establish a Resolution Corporation to monitor financial firms (along with regulators), and resolve them in case of failure. The Bill will apply to financial firms, and any other financial service provider designated as a ‘systemically important financial institution’ by the central government.

“FRDI Bill, 2017 seeks to protect and enhance the depositors’ existing rights and bring in a comprehensive and efficient resolution regime for financial firms. Bill replace the existing resolution regime by providing a comprehensive resolution regime that will help ensure that, in the rare event of failure of a financial service provider, there is a system of quick, orderly and efficient resolution in favour of depositors.”

 Main Highlights of the Bill:

Conclusion

The FRDI Bill will replace the existing resolution regime by providing a comprehensive resolution regime that will help ensure that, in the rare event of failure of a financial service provider, there is a system of quick, orderly and efficient resolution in favour of depositors.

The bill will also revoke the  amendment of resolution-related provisions in sectoral Acts as listed in Schedules of the Bill. Also it will cancel the DICGC Act to transfer the deposit insurance powers and responsibilities to the Resolution Corporation.

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Acquisory News Chronicle - December 2017