FRDI Bill gets extension, may not come even in next Budget session

The Financial Resolution and Deposit Insurance (FRDI) Bill may not be introduced in the upcoming Budget session of Parliament as the joint committee looking into it has got an extension. 

The development took place at a time when concerns were being raised in some quarters about certain provisions of the bill, which was introduced in the Lok Sabha in August this year.

Lok Sabha Speaker Sumitra Mahajan on Monday informed the House that the tenure for the joint panel on the FRDI Bill has been extended “up to the last day of Budget session, 2018.”

The joint committee reportedly decided to seek extension up to the last day of Budget Session, 2018, as the report of would not be ready for presentation by December 15.

The 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.

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

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

The bill, however, seeks to repeal the Deposit Insurance and Credit Guarantee Corporation Act under which all deposits up to Rs 1 lakh are presently protected.

Last week, finance minister Arun Jaitley said the government would fully protect public deposits in financial institutions and hinted at openness to changes in the bill.

Still, the proposed FRDI Bill is facing strong resistance from bank unions, as they have reportedly threatened to go on a nationwide strike if the bill is introduced in the winter session of Parliament. 

Trinamool Congress leaders also staged a protest against the proposed bill on Tuesday, holding placards that read: "Withdraw draconian FRDI Bill", at Mahatma Gandhi`s statue in Parliament.

Senior party leaders Derek O`Brien and Sudip Bandyopadhyay joined the protest. 

On Saturday, West Bengal Chief Minister and TMC supremo Mamata Banerjee described the bill as the "biggest assault" on financial security of the poor and the middle classes. 

The Chief Minister has asked the Central government to withdraw the legislation.