Union finance minister Nirmala Sitharaman on Friday disclosed that North Block has again started working on the Financial Resolution and Deposit Insurance (FRDI) Bill. The bill had spooked depositors a couple of years ago over a controversial bail-in clause that permitted troubled banks to dip into depositor accounts for recovery.

The Narendra Modi-government had first tabled the bill in August 2017. However, following a public outcry and to avoid any adverse reactions in the 2019 general polls, it was withdrawn a year later. The finance ministry has now again begun work on the bill, though the timeline of its introduction is not yet known, Sitharaman said here on Friday.

“It was once introduced and withdrawn for some reason. We have started working on it again... I don’t know when we will introduce it, but we are working on it,’’ she said while replying to a query at a press conference on Union Budget 2020-21. The meeting in Mumbai came after an interaction with industry and policy makers in the financial capital.

Though the finance minister did not disclose any details, it is not clear if the new avatar of the bill will again contain the bail-in provision. However, media reports late last year had indicated that the new bill may not come with the clause.

One of the key reasons behind the original bill sparking controversy and fear among the public was the provision that if a bank or a financial institution failed, depositors’ money may also be used to rescue the lender.

The August 2017 bill had also proposed the creation of a resolution corporation which was to revive financial firms .

There were also fears with regard to the deposit insurance cover that is available to every depositor. This was because the proposed resolution corporation had powers to provide insurance (on a deposit) up to a certain limit which was not specified.

Incidentally, in the 2020-21 budget, Sitharaman has raised the deposit insurance cover to Rs 5 lakh from Rs 1 lakh. It remains to be seen if the new FRDI bill assures this cover.

The government’s interest in reviving the FRDI bill stems from the fact that certain non-banking finance companies (NBFCs) have defaulted in payments to creditors. In November last year, the government had issued a notification which said that the Reserve Bank of India (RBI) can seek resolution of NBFCs having assets of at least Rs 500 crore under the insolvency law.

Sitharaman also said that the central government wants to move towards simplification of the tax regime and that it will take steps so that civil offences are not treated as criminal offences.

“We have shown our intent to move towards a simplified tax regime’’, she said while referring to last year’s cut in corporate taxes. She further pointed out that the taxpayer charter that was announced in the Union Budget is based on trust which should be there between the taxation regime and individuals.