Insolvency framework soon for banks, insurers
The Cabinet recently gave its nod for the introduction of the Financial Resolution and Deposit Insurance Bill, 2017 (FRDI), in Parliament. The Bill seeks to cut down the time and costs involved in resolving the problem of distressed entities.
It will create a framework to deal with bankruptcy in banks, insurance companies and financial sector entities. Once enacted, it will also lead to the establishment of a Resolution Corporation.
The proposal is aimed at giving comfort to consumers of financial service providers in instances of any financial distress by strengthening and streamlining the current framework of deposit insurance for retail depositors.
The Resolution Corporation will protect the stability and resilience of the financial system by protecting consumers of covered obligations up to a “reasonable limit” and by protecting public funds “to the extent possible,” an official release said.