Parliamentary panel to invite RBI governor to brief on FRDI Bill

New Delhi: RBI Governor Urjit Patel is likely to brief the members of the parliamentary panel assessing the crucial Financial Resolution and Deposit Insurance (FRDI) Bill next month, a member said. The panel has decided to invite Patel at a time when the bill was opposed by the bank unions who have also requested the finance minister to withdraw this legislation.

The Financial Resolution and Deposit Insurance Bill, 2017, seeks to create a framework for resolving bankruptcy in financial firms (such as banks and insurance companies), as there is no specific law at present in India for resolution of failures of financial services providers.

The legislation was introduced in the monsoon session but was later referred to the joint committee of both the houses of Parliament, the Lok Sabha and the Rajya Sabha. “The panel wants to take the view of the central bank on this crucial legislation, therefore, RBI Governor Urjit Patel will be invited in the next meeting of the committee in November,” a member said on condition of anonymity.

The all party parliamentary committee has to submit its report by the last day of the first week of the winter session of Parliament. The bill proposes to establish a ‘Resolution Corporation’ which will classify service providers such as banks and insurance companies based on their risk of failure. The corporation may also investigate their activities.

The bank unions were opposing the bill for this proposal and had said the objective is to heavily empower the new authority with sweeping powers to dismantle and erase public sector financial institutions.