24.2 C
New Delhi
Tuesday 18 February 2020

Govt will fully protect public deposits: Jaitley

New Delhi: Seeking to allay concerns of depositors over provisions of a draft law, Finance Minister Arun Jaitley on Monday said the government will fully protect public deposits in financial institutions even as he hinted at openness to changes in the proposed FRDI Bill.

Jaitley said the government’s massive Rs 2.11 lakh crore capital infusion plan in banks was to strengthen banks and there was no question of any lender failing.

If any such situation arises, the government will “fully protect” the deposits made by customers, the finance minister said here adding that “the government is very clear about it”.

Jaitley made the comment to allay concerns with regard to a provision in the Financial Resolution and Deposit Insurance (FRDI) Bill, 2017, first introduced in the Lok Sabha in August this year and currently undergoing scrutiny by a joint parliamentary committee.

The so-called “bail-in” clause in the draft legislation has been commented upon by experts as of bringing potential harm to deposits, in the form of savings accounts.

“The Bill is before the joint committee of Parliament.

Whatever are the recommendations of the committee, the government will consider,” he said.

He said rumours are being spread about the provisions of the bill. “The government has already clarified and said it is committed to strengthen PSU banks and financial institutions. About Rs 2.11 lakh crore is being pumped in to strengthen the public sector banks.”

The FRDI Bill proposes to create a framework for overseeing financial institutions such as banks, insurance companies, non-banking financial services (NBFC) companies and stock exchanges in case of insolvency.

The ‘Resolution Corporation’, proposed in the draft bill, would look after the process and prevent the banks from going bankrupt. It would do this by “writing down of the liabilities”, a phrase some have interpreted as a “bail in”.

The draft bill empowers Resolution Corporation to cancel the liability of a failing bank or convert the nature of the liability.

It does not specify deposit insurance amount. At present, all deposits up to Rs 1 lakh are protected under the Deposit Insurance and Credit Guarantee Corporation Act that is sought to be repealed by this bill.

PTI

Stay on top - Get daily news in your email inbox

Sirf Views

Tapas Pal, A Death No One Would Genuinely Condole

In 1980, after Bengali film superstar Uttam Kumar died, Dadar Kirti of Tarun Majumdar was released after Durga Puja. The voice...

Must India Invest In Donald Trump?

As many of his cabinet picks know, to their eternal regret and shame, his commitment lasts only as long as you are gullible

Protesters Need Economic Education, Mr Bhagwat

There is no escape from misery unless teams of economic educators convince all sections of society socialism is the cause of their distress

BJP Could Not Have Won With This Approach To Delhi

From not paying attention to the corruption-ridden MCD to aloof leaders whose houses witnessed no activity during campaigns, BJP went all wrong in the Delhi assembly election

AAP Win In Delhi Was Foregone Conclusion: 5 Reasons

The five factors that contributed to the AAP victory have been arranged in the decreasing order of relevance; the first three will remain constant for a few more Delhi elections

Related Stories

Leave a Reply

For fearless journalism

%d bloggers like this: