The Union Cabinet has decided to introduce a Financial Resolution and Deposit Insurance Bill to provide for a comprehensive resolution framework to deal with bankruptcy situation in banks, insurance companies and financial sector entities.
The Bill, when enacted, will pave the way for setting up of the Resolution Corporation. "It would lead to repeal or amendment of resolution-related provisions in sectoral Acts as listed in Schedules of the Bill. It will also result in the repealing of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 to transfer the deposit insurance powers and responsibilities to the Resolution Corporation," the government said in a release.
The Centre added that the proposed Corporation would also protect the stability and resilience of the financial system; protecting the consumers of covered obligations up to a reasonable limit; and protecting public funds, to the extent possible.
The Government has recently enacted the Insolvency and Bankruptcy Code, 2016 ("Code") for the insolvency resolution of non- financial entities. 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, the Centre added.
The Cabinet has also decided to approve an agreement with Palestine for development of agriculture.