Financial Resolution & Deposit Insurance Bill 2017 | SBI PO Prelims & Mains Preparation - Bank Exams PDF Download

Introduction

Background

• In India there was never an effective framework to deal with Bankruptcy. In the 2016-17 budget speech Union Finance Minister Mr Arun Jaitley said, " A systematic vacuum exists with regard to bankruptcy situation in financial firms. A comprehensive code on resolution on financial firms will be introduced as a bill in the Parliament." On March 15,2016 a committee headed by Mr. Ajay Tyagi, Additional secretary, Department of Economic Affairs, Ministry of Finance to draft and submit the bill.
• Purpose of this bill is to create resolution regime for financial Institution when they face crisis without creating financial burden for the taxpayers. On 31^st October, 2016 it was approved to be introduced in the Parliament.

Key Features

• It makes the financial service providers to maintain the discipline in the event of financial crisis. 
• It seeks to decrease the time and cost involved in resolving distressed financial entities. 
• According to the finance Ministry FRDI bill, 2017 seeks to protect customers of Financial service providers during financial crisis. 
• Strengthening and streamlining the current framework of Deposit insurance for the benefit of retail depositor is the main purpose. 

What are the benefits

• It promotes ease of doing business in the country. 
• Provides financial Inclusion and increases access to credit. 
• The bill would also help in maintaining financial stability in the economy by ensuring adequate prevention measures. 
• It can benefit large number of retail depositors as it seeks to decrease the time and cost involved. 
• It increases enterprise growth, which leads to overall growth and employment generation. 

The Govt. Has already enacted the Insolvency and Bankruptcy Code, 2016 for the resolution of Insolvency in Non-financial entities.