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The Union Cabinet on Wednesday approved the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill and the Limited Liability Partnership (Amendment) Bill, 2021. It also cleared Memorandum of Understanding (MoU) between International Financial Services Centres and Multilateral agencies.
Deposit Insurance
Amendment in the Act will enable depositors to access their deposit up to sum prescribed under deposit insurance which is ₹ 5 lakh in case even if the bank is placed under moratorium.
Depositors of PMC Bank likely to be covered under the new mechanism.
As of now, depositors have to wait for liquidation or passage of resolution to get the benefit of deposit insurance. This takes up to 8-10 years. Now this will not be the situation. Finance Minister Sitharaman said that payment has to be made within 90 days. “First 45 days will be taken by the banks for collecting the information and next 45 days for checking. Then on 91st or 92nd day or around that, payment will be made,” Sitharaman said while briefing about the Cabinet decisions here.
“The Bill will be tabled during the current session,” she said. However, she expressed disappointment that Opposition is not allowing the Parliament to function. “It seems that they are not concerned with the problem of a common man,” she said while indicating the Bill is likely to be introduced on Thursday.
Last year, the Government raised the deposit insurance to ₹ 5 lakh from ₹ 1 lakh. Sitharaman said that with this 98.3 per cent in terms of 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.
This Bill is follow-up to the budget announcement. Finance Minister had said that amendments to the DICGC Act, aims to streamline the provisions, so that if a bank is temporarily unable to fulfil its obligations, the depositors of such a bank can get easy and time-bound access to their deposits to the extent of the deposit insurance cover.
According to legislative agenda prepared for the Monsoon session, purpose of this Bill is to enable easy and time-bound access for depositors to their hard-earned money and to further instill confidence in depositors about the safety of their money, it is proposed to introduce amendments to the DICGC Act, 1961. The objective is to enable access by depositors to their savings through deposit insurance in time bound manner in case there is suspension of banking business of the insured bank under various provisions of the Banking Regulation Act, 1949.
Limited Liability Partnership
The Limited Liability Partnership (Amendment) Bill, 2021 aims to carry out amendments to the Limited Liability Partnership Act, 2008 to decriminalize twelve compoundable offences which deal with procedural and technical violations, Omission of two provisions is also proposed.
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