Jumping to damage control following a whiplash over the bail-in clause in a draft legislation on financial resolution, Finance Minister Arun Jaitley has asserted that depositors would be “fully protected” in the event of a bank failure.
This is the third clarification issued buy the Finance ministry within a week in its bid to assuage concerns over the safety of depositors’ money in bank accounts if the Financial Resolution and Deposit Insurance Bill 2017 is passed and implemented.
The ‘bail-in’ clause in the FRDI Bill allows for the cancellation or modification of bank deposits to shore up bank finances.
Also Read: FRDI Bill and 'bail-in' clause: An explainer on existing law, new bill, fears, Govt's 'rethink' signal
“The Union Minister for Finance and Corporate Affairs Arun Jaitley said that the Financial Resolution and Deposit Insurance Bill 2017 is before the Joint Committee of Parliament,” the Finance Ministry said in a statement on Monday.
“Whatever are the recommendations of the Committee, the Government will consider them. But rumours are being spread about the Bill.”
The Finance Ministry had on December 7 issued a statement saying that the provisions of the FRDI Bill do not hurt depositors’ interests and that the government was committed to protecting them.
“Mr. Jaitley said that the Government has already clarified and said it is committed to strengthen the PSU banks and the financial institutions,” the ministry added in its statement on Monday.
Also Read: FRDI Bill transparent, will protect depositors' rights: FinMin allays fears on bank ‘bail-in’ provision
Removing any misgivings and rebutting false rumours being spread about the provisions of the FRDI Bill 2017, the Finance Minister said that about Rs 2.11 lakh crore is being pumped in to strengthen the public sector banks and that the question of bank failures does not arise, it added.
“If such a situation arises, deposits made by the customers, the government will fully protect them. The government is very clear about it,” Jaitley was cited as saying in the statement.
The government has already signaled a rethink in the face of mounting criticism over the contentious clause. Finance Minister Arun Jaitley said last week that the Bill was before a parliamentary committee for consideration and the government was committed to protect the interests of depositors.
The “objective of the government is to fully protect the interest of the financial institutions and the depositors,” Jailtey had tweeted earlier.
“The provisions contained in the FRDI Bill, as introduced in the Parliament, do not modify present protections to the depositors adversely at all,” the ministry added in the statement.
“They rather provide additional protections to the depositors in a more transparent manner.”