Cabinet approves introduction of Bill for resolution of financial entity bankruptcy cases

June 14, 2017 05:12 pm | Updated 05:12 pm IST - NEW DELHI

The Union Cabinet on Wednesday approved a proposal to introduce a Bill that would provide a comprehensive resolution framework for bankruptcy cases involving banks, insurance companies, and financial sector entities.

The Financial Resolution and Deposit Insurance Bill 2017, when enacted, will have a provision for the setting up of a Resolution Corporation, and would also see the repealing or amendment of several resolution-related provisions in Acts pertaining to the particular sectors. The passage of the Act will also lead to the repealing of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 in order to transfer the deposit insurance powers and responsibilities to the Resolution Corporation.

“The Government has recently enacted the Insolvency and Bankruptcy Code, 2016 (‘Code’) for the insolvency resolution of non-financial entities,” the official statement said. “The proposed Bill complements the Code by providing a resolution framework for the financial sector. Once implemented, this Bill together with the Code will provide a comprehensive resolution framework for the economy.”

“It (the proposed Bill) also aims to inculcate discipline among financial service providers in the event of financial crises by limiting the use of public money to bail out distressed entities,” the statement added. “It would help in maintaining financial stability in the economy by ensuring adequate preventive measures, while at the same time providing the necessary instruments for dealing with an event of crisis.”

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.