Good intentions, bad articulation

While providing a streamlined exit route for failed financial entities, the Financial Resolution and Deposit Insurance Bill should ensure that customers' deposits are protected

After the Financial Resolution and Deposit Insurance (FRDI) Bill 2017 was introduced in the Lok Sabha (it was subsequently referred to a Joint Parliamentary Committee), apprehensions have been aired about the safety of customer deposits maintained with banks. The Bill provides for the setting up of a Resolution Corporation (RC), akin to the Insolvency and Bankruptcy Board of India for business and commercial entities, to oversee the resolution of bankrupt financial entities. Clause 52 of the Bill empowers the RC to allow, in the resolution process, failed entities to use their liabilities (which are deposits of customers that the financial