Media reports say the Central government is likely make changes in the original draft of the Financial Resolution and Deposit Insurance [FRDI] Bill.
The legislation introduced in 2017 by then finance minister Arun Jaitley was withdrawn after objections were raised to the bail-in clause, under which depositors of a failing financial institution would bear part of the resolution cost.
It is worth repeating that the Insolvency and Bankruptcy Code was not applicable to deposit-taking financial institutions.
The current bank deposit insurance scheme covers all types of bank deposits — savings, fixed and recurring — up to Rs 1 lakh by Deposit Insurance and Credit Guarantee Corporation, an arm of the Reserve Bank.
