India: Financial Resolution And Deposit Insurance Bill 2017: Resolution Framework For The Financial Sector Entities


The Union Cabinet, in its meeting held in the month of June 2017, has approved1 the Financial Resolution and Deposit Insurance Bill, 2017 ("FRDI Bill") to be introduced in the Parliament. The FRDI Bill is a separate bankruptcy law to deal with insolvency and bankruptcy in financial sector companies covering all financial service providers including banks, NBFCs, microfinance institutions and insurance companies.

This Bill is similar to the Insolvency and Bankruptcy Code, 2016, which was enacted in 2016 to deal with the issues relating to insolvency and bankruptcy of companies in all sectors other than financial sectors. Therefore, in order to deal with the situation of insolvency and bankruptcy in financial sectors entities such as banks and insurance companies, the FRDI Bill has been introduced.


Subsequent to the announcement made by the Union Finance Minister, Arun Jaitley, in his budget speech of 2016-17, to introduce a comprehensive Code on resolution of financial firms, a committee was formed in the month of March 2016 under the chairmanship of Shri Ajay Tyagi, Additional Secretary, Department of Economic Affairs. On the report of the committee, the FRDI Bill was drafted and after considerations and suggestions received from various authorities & stakeholders as sought by the Finance Ministry, the Bill was approved by the Union Cabinet to get introduced in the Parliament.

Key objectives of the FRDI Bill:

The FRDI Bill provides a framework for resolution mechanism of certain specified categories of financial service providers and establishment of Resolution Corporation in order to have the stability and resilience of the financial system in the country. The key objective of the FRDI Bill is to ensure an early recognition of a financial firm, regulated by Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDA), Pension Fund Regulatory and Development Authority (PFRDA) or any other authority as may be notified by the Central Government, which are in financial distress and thus to provide a resolution mechanism to minimize the impact of such financial trouble on the depositors and entire economy of the country.

Salient features of the FRDI Bill:

The salient features of the FRDI Bill are:

  1. Establishment of Resolution Corporation: The FRDI Bill provides for establishment of a Resolution Corporation as principal agency with multiple roles of supervision and oversight from a viability perspective, receiver in case of entities for which resolution plan is to be prepared. The Resolution Corporation will also act liquidator or receiver in the case of liquidation of entities classified as having imminent risk entities to ensure quick payments to depositors and settle the claims of debtors and equity holders.
  2. Covered Service Provider: The FRDI Bill provides for the resolution of covered service provider as listed in the Schedule 2 of the FRDI Bill. Under the FRDI Bill, the powers and functions of the Resolution Corporation are applicable to covered service provider. Such covered service providers, among others, include any banking institution, any insurance company, any other financial service provider excluding individuals and partnership firms, Indian branches of foreign banks etc.
  3. Systemically Important Financial Institutions ("SIFIs"): The FRDI Bill provides for designation of certain categories of financial institutions as SIFls by the Central Government. Such designated financial institutions may or may not be a covered service provider and once designated all the provisions of the Act will be applicable to them. The Bill also provides some additional provisions in respect to such SIFIs.
  4. Time limit on Resolution: The FRDI Bill provides that any process of resolution of a covered service provider shall be completed within a period of two years from the date on which such entity is classified to be at critical risk to viability. However, such period of two years may be extended for up to one year.
  5. Consolidation of existing laws relating to resolution of certain categories of financial institutions: The FRDI Bill proposes to consolidate the existing laws relating to resolution of certain categories of financial institutions, including banks, insurance companies, financial market infrastructures, payment systems, and other financial service providers into a single legislation.
  6. Repeal of Deposit Insurance and Credit Guarantee Corporation ('DICGC') Act, 1961: The FRDI Bill also provides for repeal of DICGC Act, 1961 in the manner as provided in the Bill. Post enactment of the FRDI Bill, the DICGC shall stand dissolved and all its functions will be carried out by the Resolution Corporation.
  7. Cross Border Resolution: The FRDI Bill also provides for enforcement of resolution in a foreign country in case there is an agreement to this effect between the Indian government and such foreign country and its regulators.

Benefits & Effects :

The FRDI Bill has been enacted for the purpose of providing resolution regime for companies in the financial sector such as banks, insurance companies and financial institutions when such entities face financial crisis. The FRDI Bill will benefit large numbers of retail depositors and customers of financial service providers. The FRDI Bill will decrease the time and costs involved in resolving distressed financial service provider entities. By providing comprehensive resolution mechanism, the FRDI Bill along with the Insolvency and Bankruptcy Code, 2016 will facilitate reducing the NPAs and also maintaining stability in the economy.



The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.