The finance ministry is working on the contentious Financial Resolution and Deposit Insurance (FRDI) Bill but not sure when it will be tabled in the house, Union minister Nirmala Sitharaman said.
The comments assume importance given the massive five-fold hike in deposit insurance and the recent changes in the insolvency laws that included insolvency solutions for financial institutions.
"We are working on the FRDI Bill; but not sure when it can get through the House," the minister said.
She also welcomed the liquidity measures announced by the RBI for retail customers in general and for MSMEs and realty players in particular at the sixth monetary policy review on Thursday.
The FRDI Bill seeks to offer a bail-in clause to banks, which many fear will be detrimental to depositors.
In August 2018, the government withdrew Financial Resolution Deposit Insurance Bill from the Lok Sabha after public criticism over the provision of the "bail-in" clause, which said that depositors' money could be used to resolve a failing bank.
The crisis in the non-banking financial sector and issue at the Punjab and Maharashtra Co-operative Bank had led to views that a resolution mechanism for financial sector companies, including banks, must be in place.
In November, the government amended Insolvency and Bankruptcy Code to bring NBFCs with over 5 bln rupees assets under the purview of the code. The Reserve Bank of India has been given the power to initiate resolution process against an NBFC.
Dewan Housing Finance Corp was the first non-bank lender to be referred for resolution under IBC.
However, private sector banks are still excluded under the IBC.
In December, Uday Kotak, managing director and chief executive officer of Kotak Mahindra Bank had said as more banks are being allowed to enter the system, policymakers should also think more about exit policy.
