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Shaktikanta Das bats for resolution corporation to revive stressed companies

Shaktikanta Das bats for resolution corporation to revive stressed companies

Reserve Bank of India (RBI) Governor Shaktikanta Das on Saturday batted for the setting up of a resolution corporation to tackle resolution and revival of stressed firms in the financial sector, an idea dropped by the government two years ago.

The Finance Ministry had, in 2018, withdrawn the Financial Resolution and Deposit Insurance (FRDI) Bill — which proposed a resolution corporation — over the controversial bail-in clause, which led to fears among depositors that the government may cancel or modify deposits in banks. Earlier this year, before the Covid-19 pandemic hit the country, the Finance Ministry was working on a proposal to set up a Resolution Authority — under a new law styled as Financial Sector Development and Regulation (FSDR) Bill — comprising the members from financial sector regulators as well as senior government officials as its members.

On Saturday, the RBI Governor said a resolution corporation is needed to deal with stress in the financial system. “We need a legislative backing to have some kind of a resolution corporation which has to deal with resolution and revival of stressed financial firms,” Das said at a banking conclave organized by the State Bank of India.

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