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Sujai Adithya
Business Development and Banking & Financial Services Expert
Asked a question last year

What is Resolution Corporation?

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Sujai Adithya
Business Development and Banking & Financial Services Expert

What is Resolution Corporation?

  • Establishment of a Resolution Corporation is proposed in the FRDI bill.
  • This corporation which will monitor financial firms and it will calculate their stress and take "corrective actions" in case of a failure.
  • This Corporation will group the banks or financial firms on their risk factors.
  • Risk factors are categorized as low, moderate, material, imminent, and critical.
  • During critical condition, the Corporation will take over and resolve issues within a year.
  • The corrective measures are merger or acquisition, transferring the assets, liabilities to another firm, or liquidation.
  • The number of employees in the stressed firm can be cut down, employees can be transferred and issue pay-cuts. Beyond two years, the firm would be liquidated.

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