The Financial Resolution and Deposit Insurance Bill, 2017, or FRDI Bill was aimed at providing a mechanism and framework for resolution of certain categories of financial service providers that might be in distress, and for resolving bankruptcy in banks, insurance companies and other financial establishments.1 Since, there is no comprehensive and integrated legal framework for resolution and liquidation of financial firms in India presently, in order to have a systematic resolution of all financial firms — banks, insurance companies and other financial intermediaries— this Bill had been introduced.
It was introduced in the Lok Sabha on August 10, 2017, and was under the consideration of the Joint Committee of the Parliament which had been asked to submit its Report to the Parliament by the last day of the Budget Session, 2018, during which it was withdrawn by the government. But, now, that the Bill has been withdrawn by the government, it is imperative to understand the nature and characteristics of the said Bill in order to determine the reasons behind such withdrawal and the present scenario. Although, the drafters of the Bill suggested that the Bill will promote ease of doing business in the country, improve financial inclusion, increase access to credit, and encourage discipline among the financial service providers by putting a limit on the use of public money to bail-out distressed entities, there are many questions that have arisen regarding its functioning. The key issues in the Bill were the establishment of the uniform body called Resolution Corporation, its powers, the Deposit Insurance Coverage Limit, the provision of bail-in, and the lack of autonomy of the Systematically Important Financial Institutions (SIFI). All these issues oblige us towards answering the question as to whether the Resolution Corporation will resolve complications or not.