Govt will protect all deposits in banks, says Arun Jaitley

New Delhi: As concerns over Financial Resolution and Deposit Insurance Bill, 2017 (FRDI)  refuses to die, Union finance minister Arun Jaitley on Monday himself came forward to assure that in case of a bank failure the Centre will fully protect deposits made by the customers.  

“The government is very clear about it,” said the finance minister.

This is the third statement by the finance ministry in last seven days assuring people that  the FRDI bill will not harm their interests in case of a bank failure.

There had been apprehensions in some sections that the Financial Resolution and Deposit Insurance Bill, 2017 (FRDI) may result in people losing their hard earned savings in case of a bank failure.

Mr Jaitley said that  about Rs 2.11 lakh crore is being pumped in to strengthen the Public Sector Banks so there is no such question arises of a failure of banks.

“FRDI Bill, 2017 is before the Joint Committee of Parliament. Whatever are the recommendations of the committee, the government will consider. But rumours are being spread about the bill,” the minister said.

The FRDI Bill was introduced in the Lok Sabha in August  2017.

The FRDI Bill proposes to create a framework for overseeing financial institutions such as banks, insurance companies, NBFCs companies and stock exchanges in case of insolvency.

The major controversy is about “the bail-in” provision in the FRDI Bill, which some analysts say may mean that creditors and depositors have to absorb losses in case of a bank failure. This had raised concerns that common people may have to bail out banks with their hard-earned money if a bank goes bust.

Currently under the Deposit Insurance Corporation Act, a maximum of Rs 1 lakh  of every depositor in banks  is insured  in case a bank goes bust. But, FRDI proposes a ‘Resolution Corporation’ in association with regulator will determine the amount of money of people to be insured in case of bank failures.