Skip to main content

Bankruptcy Bill gets Cabinet nod

By

A proposal to introduce a Bill in Parliament for setting up a Resolution Corporation to deal with bankruptcy in banks, insurance companies and financial entities received the Cabinet go ahead on Wednesday.

The Financial Resolution and Deposit Insurance Bill, 2017, which aims to instil discipline in financial service providers in the event of a financial crisis by limiting the use of public money to bail out distressed entities, was approved by the Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday, an official statement said.

The proposed Bill will provide for  a comprehensive resolution framework to handle any bankruptcy situation in banks, insurers and financial sector entities.According to the statement, the Bill—when enacted—will pave the way for setting up of a Resolution Corporation.

It would also 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,” it said.

The Resolution Corporation would ensure the stability and resilience of the financial system, protecting consumers of covered obligations up to a reasonable limit and public funds to the extent possible.The government has recently enacted the Insolvency and Bankruptcy Code, 2016, 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.

It seeks to give comfort to consumers of financial service providers during any financial distress.It would help in maintaining financial stability in the economy by ensuring adequate preventive measures, while, at the same time, providing necessary instruments for dealing with a post crisis situation.

The Bill aims to strengthen and streamline the current framework of deposit insurance for the benefit of a number of retail depositors.Further, this Bill seeks to cut down the time and costs involved in resolving the problem of the distressed entities.

Business Standard New Delhi, 15th June 2017

Comments

Post a Comment

Popular posts from this blog

Data storage norm splits digital payments industry

By
Data storage norm splits digital payments industry  India’s nascent digital payment industry could be thrown into disarray due to the demand by the Reserve Bank of India (RBI) that all user data be stored within the country, fears an industry grouping, which has termed the decision as “heavy-handed”, even as others, including the country’s largest digital payment provider Paytm, have hailed the move.  In a bid to narrow the growing schism, the industry is planning to send a formal representation to the regulator highlighting its concerns, a top official told ET.  “We are trying to build a consensus on the issue," said the person adding that the representation to the central bank will be ready this week.  RBI on April 6, mandated all payment companies—global and local—to set up data storage facilities within India by October. The stringent six-month deadline has attracted the ire of several sections of the industry that fear it will lead to a disruption of wel...
18 comments
Read more

Sebi to finalise options in commodities today

By
The Commodity Derivatives Advisory Committee of the Securities and Exchange Board of India ( Sebi) will meet on Friday with senior officials of the latter, to give a final shape to the rules on options trading in commodity futures, beside revising the warehousing norms to ensure good delivery on settlement. The decision taken, after discussing with the advisory committee, will be placed before the regulator’s board, to finalise the regulations. According to knowledgeable sources, three commodities in each segment, agricultural and non- agricultural, have been proposed for introducing options. It appears commodities from the soya and guar segments are preferred in the former. From the non- agri segment, it is likely that gold, silver and crude oil will be finalised. All these These have better liquidity and both the National Commodity and Derivatives Exchange and the Multi Commodity Exchange, respectively, will be able to introduce the options. In the equity segments, options ar...
17 comments
Read more

E tailers global warehouses may come under tax net

By
E tailers  global warehouses may come under tax net Warehouses of e-commerce companies based in countries such as Australia, Japan, Italy,  Spain, the Netherlands, and Russia may not be exempted from paying the income tax in India  once the multilateral instrument (MLI) to prevent base erosion and profit shifting (BEPS)  comes into force. BEPS refers to the reporting framework mooted by the Organisation for Economic  Co-operation and Development (OECD) and signed by over 100 countries, including India, to  prevent exploiting gaps and mismatches in tax rules to shift profits by multinational  companies (MNCs) artificially to low-tax regimes. The representatives of 68 countries on June 7 this year signed an agreement (MLI) in Paris  to amend their tax treaties to bring them in alignment with measures to prevent BEPS.  However, there is still time for synchronising tax treaties with the multilateral  instrument. India has submitte...
17 comments
Read more