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The Union Cabinet, on Wednesday, approved the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill. This will enable depositors access their deposits up to the sum prescribed under deposit insurance – ₹5 lakh – even if the bank is placed under moratorium.
Depositors of PMC Bank are also likely to be covered under the new mechanism, which means they can withdraw up to ₹5 lakh against ₹1 lakh once the Bill is passed in Parliament. As of now, depositors have to wait for liquidation or passage of resolution to get the benefit of deposit insurance. Finance Minister Nirmala Sitahraman, while briefing mediapersons after the Cabinet meeting, said that normally it takes 8-10 years after complete liquidation to get money under insurance.
“However, now even if there is a moratorium, within 90 days, the process will definitely be completed and, accordingly, give relief to depositors.
The first 45 days will be taken by the banks for collecting the information and next 45 days for checking. Then, on the 91st or 92nd day, payment will be made,” said Sitharaman.
“The Bill will be tabled during the current session,” she said. Expressing disappointment over the Opposition not allowing Parliament to function, she said: “It seems they are not concerned with the problem of the common man.”
Last year, the government raised the deposit insurance to ₹5 lakh from ₹1 lakh. Sitharaman said that with this decision, 98.3 per cent in terms of the number of deposit accounts, and 50.9 per cent in terms of deposit value, will now be covered. Globally, these numbers are 80 and 20-30 per cent, respectively.
Budget follow-up
This Bill is a follow-up to the Budget announcement. The Finance Minister had said that amendments to the Deposit Insurance and Credit Guarantee Corporation Act (DICGC) aims to streamline the provisions, so that if a bank is temporarily unable to fulfil its obligations, the depositors can get easy and time-bound access to their deposits to the extent of the deposit insurance cover.
For the deposit cover, customers are not required to pay anything. The premium at the rate of 12 paise per ₹100 needs to be paid by the banks.
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