The bill, currently withdrawn, had various tools to resolve a failing financial firm, such as transferring its assets and liabilities.
The bill, currently withdrawn, had various tools to resolve a failing financial firm, such as transferring its assets and liabilities.The Financial Resolution and Deposit Insurance Bill was introduced in Lok Sabha in 2017 and was referred to the Joint Committee of Parliament for scrutiny. This bill introduced a bail-in provision whose purpose is to provide capital to absorb a bank's losses and ensure its survival. It had presented a list of resolution tools, including transferring whole or parts of a financial firm's assets and liabilities to another healthy firm. It provided for establishing a resolution corporation with powers relating to the transfer of assets to a healthy financial firm, merger or amalgamation, an order of the National Company Law Tribunal to start liquidation.
Under the bail-in process, a failing financial firm could transfer its assets and liabilities, merging it with another firm or liquidating it. The resolution corporation could internally restructure its debt by canceling liabilities that the firm owes to its creditors, or converting debt into equity.
The Ministry of Finance has clarified that the Financial Resolution and Deposit Insurance bill introduced in Lok Sabha on August 10, 2017, has been withdrawn and explained that the Government has not decided to reintroduce the FRDI Bill.
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