Centre announced the withdrawal of the bill on Tuesday, restoring the interest of depositors.
The FRDI Bill contained a ‘bail-in’ clause for resolution of bank failure which was perceived as a step against the savings account holders.
Now as the bill has been dropped, the status quo will prevail and the deposits will be secured under the Deposit Insurance and Credit Guarantee Corporation (DICGC).
The deposit insurance premium is entirely secured the insured bank. DICGC secures all commercial banks including branches of foreign banks functioning in India, local area banks, cooperative banks, and regional rural banks.
DICGC insures banks up to a maximum of Rs 1 lakh for both principal and interest amount held in the same capacity. It comes into force on the date of liquidation or cancellation of bank’s licence or the date on which the scheme of merger comes into effect.