In a serious aid to depositors of troubled banks, the Union Cabinet on Wednesday accredited an modification to the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, beneath which, account holders can entry up to ₹5 lakh deposits inside 90 days of a financial institution coming beneath moratorium. This modification, as introduced by Finance Minister Nirmala Sitharman in a press convention in the present day, will guarantee well timed help to depositors.
Here’s extra readability on the modification in DICGC Act for FD account holders:
-Under the modification, depositors of a financial institution beneath moratorium will not have to wait to entry their money. The Union Cabinet has determined that in 90 days depositors will get their money again.
-First 45 days will go for banks in misery to hand over to the insurance coverage company. Within 90 days course of will likely be positively accomplished with out ready for decision, added FM.
-All industrial banks and even branches of overseas banks working in India will come beneath the purview of this laws and this will likely be relevant to banks that are at current beneath moratorium.
-Sitharaman additionally stated that 98.3% of all deposit accounts will get lined whereas by way of worth of the deposits, over 50% protection will likely be there by DICGC Act. “Each depositors deposit in a bank is insured up to a maximum of ₹5 lakh, for both principal and interest. Now in India with an increase in insurance amount from ₹1 lakh to ₹5 lakh is going to cover 98.3% of all deposit account,” Finance Minister stated.
-“This clearance now, therefore, is going to give relief to all those institutions which have already come under moratorium. It is not going retrospectively back, but if your bank has already been declared under moratorium, this will cover,” she added.
Last year, the authorities raised insurance coverage cover on deposit five-folds to ₹5 lakh to present help to depositors of ailing lenders like Punjab and Maharashtra Co-operative (PMC) Bank. Following the collapse of PMC Bank, Yes Bank and Lakshmi Vilas Bank too got here beneath stress, main to restructuring by the regulator and the authorities.
The modification to the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961 is the price range announcement made by the Finance Minister. The Bill is predicted to be launched in the present monsoon session, Sitharaman stated, whereas sharing particulars about the Cabinet meeting.
Once the Bill turns into legislation, it’s going to present fast aid to 1000’s of depositors, who had their money parked in careworn lenders reminiscent of PMC Bank and different small cooperative banks. As per the present provisions, the deposit insurance coverage of up to ₹5 lakh comes into play when the licence of a financial institution is cancelled and the liquidation course of begins. DICGC, a wholly-owned subsidiary of the Reserve Bank of India, supplies insurance coverage cover on financial institution deposits.
Never miss a narrative! Stay related and knowledgeable with Mint.
our App Now!!