The Centre has decided to drop the Financial Resolution and Deposit Insurance Bill, after concerns about the security of bank deposits, The Indian Express reported on Wednesday. The decision to withdraw the bill was made on July 13, a day before the protests by employee unions of banks and state-run insurance companies.

The Department of Economic Affairs has been asked to prepare a proposal to be presented before the Cabinet for withdrawal of the bill. An unidentified government official told the newspaper that the Cabinet may take up the proposal on Wednesday.

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The reason for reconsidering the bill is a controversial “bail-in” clause that says that in case of insolvency in a bank, the depositors will have to bear a part of the cost of the resolution by reducing their claims. This has resulted in panic cash withdrawals from banks, The Indian Express said.

The bill has been referred to a Joint Committee of Parliament, and the panel is expected to submit its report by August 10, the last day of the Monsoon Session. Thus, the panel is unlikely to finalise its recommendations before the Winter Session. “With the report likely to come out in December, the government’s fear could be that it would be approaching the general elections next year with large-scale negativism among the public,” the government official told The Indian Express.

Finance Minister Arun Jaitley said in December that the bill, contrary to reports, protects the rights of depositors. “The objective of the government is to fully protect the interest of the financial institutions and the depositors,” he tweeted. “The government stands committed to this objective.” The government had also said that the bail-in clause would be used only with the consent of depositors, and that depositors would be given preferential treatment.

Prime Minister Narendra Modi had said at an election rally in Gujarat last year that the Congress was “spreading lies”, claiming that the bill will lead to “bankrupt banks taking away people’s hard-earned deposits”. “Do you think I will let that happen?” Modi had asked.