Rumours being spread regarding FRDI bill, govt looking to protect interest of customers: PM Modi

Prime Minister Narendra Modi said today that the government is working to protect the interest of bank customers and their deposits, seeking to dispel the rumours regarding the proposed FRDI Bill.

The so-called "bail-in" clause in the draft Financial Resolution and Deposit Insurance (FRDI) Bill, 2017 has been commented upon by experts as bringing potential harm to deposits in savings accounts. The draft law, which was introduced in the Lok Sabha in August, is undergoing scrutiny by a joint parliamentary committee.

Addressing the 90th Annual General Meeting of industry chamber Ficci here, Modi said the government is working on strengthening the banking system of the country. "Rumours are being spread regarding FRDI. The government is working for securing interest of customers and protecting their deposits, but contrary news is being spread," Modi said. When the banks and customers are protected, the country's interest is also safe, he said, calling upon Ficci to work towards dispelling such rumours. 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.