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ARTICLE · 08 NOVEMBER 2019

Resolution Regime Needed For Financial Sector Entities

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The bill proposes to establish a "resolution corporation" (RC) to ensure orderly liqui¬dation and resolution of troubled financial sector entities.

IndiaFinance and Banking
Sawant Singh
Sawant Singh
Aditya Bhargava
Aditya Bhargava
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Following the Insolvency and Bankruptcy Code, 2016, which applies to individuals and non-financial entities, the Financial Resolution and Deposit Insurance Bill, 2017, aims to provide a resolution regime for financial sector entities. The bill was introduced in parliament in August, and currently is pending examination by a joint committee of parliament.

The bill applies to all "specified service providers", defined as banks, financial institutions, insurance companies, payment systems, holding companies of specified service providers, and unregulated entities in corporate groups providing financial services, including a "systemically important financial institution" (SIFI) and the Indian branches of overseas bodies corporate. The last is a welcome addition as it addresses an oft discussed legal grey area and the impact of a cross-border insolvency on Indian depositors.

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