RBI invites comments on Report of the Working Group on Resolution Regime for Financial Institutions

High level Working Group, constituted by Financial Stability and Development Council (FSDC) has submitted its report on Resolution Regime for Financial Institutions. In order to bridge the gaps and develop an effective resolution regime for all financial institutions in line with the Key Attributes, the Group has made wide ranging recommendations taking into consideration the international best practices and work in major advanced jurisdictions as also the recommendations given by the Financial Sector Legislative Reforms Commission (FSLRC).

The Group emphasizes the need for a separate comprehensive legal framework providing the necessary powers and tools to resolve all financial institutions irrespective of ownership; and setting up of a single Financial Resolution Authority (FRA) that is institutionally independent of regulators/Government. The Group also recommends putting in place an early intervention mechanism in the form of a Prompt Corrective Action (PCA) framework with clear trigger levels for regulatory intervention in the early stages and for handing over to the resolution authority for initiating appropriate actions in the last stage.

The Report of the Working Group on Resolution Regime for Financial Institutions has been placed in the website of Ministry of Finance (MoF)/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)/Financial Markets Committee (FMC) for inviting public comments. The comments, if any, on the recommendations of the Report, may be e-mailed or sent by post to the Principal Chief General Manager, Reserve Bank of India, Department of Banking Operations and Development, 12thFloor, Central Office Building, Shahid Bhagat Singh Marg, Fort, Mumbai – 400 001 on or before May 31, 2014.