FRDI Bill gives only protection to depositors, reiterates govt

Tribune News Service

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New Delhi, January 2

The Finance Ministry today reiterated that the Financial Resolution and Deposit Insurance Bill, 2017 (FRDI) does not modify present protections to the depositors adversely at all but provides only additional protections to the depositors in a more transparent manner.

In a statement to allay misgivings about the Bill which has been referred to a Parliament committee, the Finance Ministry said that at present, deposits with banks are insured up to Rs 1 lakh. The similar protection would continue under the FRDI Bill and the Resolution Corporation is empowered to increase the deposit insurance amount.

The uninsured depositors, that is, beyond Rs 1 lakh, of a bank are treated on par with unsecured creditors under the present law and paid after preferential dues, including government dues, in the event of its liquidation.

As per the provisions of the FRDI Bill, the claims of uninsured depositors in the case of liquidation of a bank will be higher than those of the unsecured creditors and government dues.

“Therefore, the rights of uninsured depositors will be better protected and such depositors will have an elevated status in the FRDI Bill compared to the existing legal arrangements. Thus, the interests of depositors (both insured and uninsured) would be better protected under the FRDI Bill”, the government said. “Certain misgivings have been expressed in the media... these are entirely misplaced”, the government said.