Now, it is time to know as to what a Financial Resolution and Deposit Insurance Bill 2017 (FRDI 2017) mean and its implications.
The Union Cabinet has passed the FRDI bill 2017, which is to be introduced in the Parliament. This is something similar to the Bankruptcy Code 2016, which was passed last year. However, the insolvency code Act deals with companies in all the sectors, whereas the FRDI 2017 bill deals specially with the companies in the financial sector (viz Banking and Insurance). Now let us see its special features.
- This bill is introduced to fill the gap that exists in respect of bankruptcy of financial firms.
- A committee appointed for the purpose, which contained representatives from financial sector regulatory authorities and DICGC submitted its report and based on this FRDI was formulated.
- This bill is expected to protect customers of financial service providers during financial difficulties.
- Also, a strict discipline will be brought on the financial service providers, in case of a crisis arising therein, by restricting the financial assistance extended out of the public money.
- The bill is expected to bring a financial stability, in the country’s economy, through various preventive steps, and steps to be taken during the period of catastrophe.
- Retail depositors’ interest will be protected, through the process of streamlining the DICGC structure.
- A proposal to bring down the time and costs involved in resolving distressed financial bodies.
It is hoped that once this starts working, stability and resilience of different units of financial sector will be assured.