The government has decided to withdraw the controversial Financial Resolution and Deposit Insurance (FRDI) Bill and has informed about it to the Chairman of the parliamentary panel examining the proposed legislation.
Trinamool Congress leader Saugata Ray said in the Lok Sabha that Finance Minister Piyush Goyal has written to the Chairman of the Joint Parliamentary Committee, saying the government has decided to withdraw the FRDI Bill.
The Union Cabinet had earlier this month decided to withdraw the legislation in view of the concerns expressed by certain sections of people, including politicians, over the 'bail-in' clause, which they feared would harm the interest of depositors.
"Minister Piyush Goyal has written to the Chairman of the Committee saying that the government has decided to withdraw the bill. This is a victory of the opposition," Ray said while participating in a debate on Insolvency and Bankruptcy Code (2nd Amendment) Bill in the Lok Sabha.
The TMC member said that the government understood that with such a bill, it would not have won the elections next year as there were concerns about depositors' money.
The Bill, introduced in the Lok Sabha, on August 11 last year, had a 'bail-in' clause, which some experts said had the potential to harm deposits in savings bank accounts.
Amid concerns, the government had then referred the bill to a Joint Parliamentary Committee headed by BJP's Bhupendra Yadav.
The 'bail-in' clause was included in the bill as one of the tools for resolution for bank failure. It provides for depositors to bear a part of the cost of the resolution by corresponding reduction in their claims.
This provision had raised concerns that deposits could be used to bail out the failing banks.
It also provided for raising the security cover for bank deposits. At present, each depositor is protected only up to Rs 1 lakh by the Deposit Insurance and Credit Guarantee.