In what should come as a relief to depositors of stressed or weak banks facing Reserve Bank of India (RBI) action, finance minister Nirmala Sitharaman announced amendments to the Deposit Insurance and Credit Guarantee Corporation Act (DICGC), 1961.
The key feature of the proposed amendment is that depositors will not have to wait for the bank to be liquidated to claim their deposits with the lender up to Rs 5 lakh. They can do so, even if the Reserve Bank of India (RBI) imposes certain curbs on these banks.
In the last Budget, the finance minister had raised the bank deposit insurance limit to Rs 5 lakh from Rs 1 lakh per depositor. The deposit insurance premium paid by the banks to the DICGC is borne entirely by the insured lender.
The DICGC insures all bank deposits, that includes savings, fixed, current and recurring deposits.
Earlier, if a bank went into liquidation, the DICGC was liable to pay to each depositor through the liquidator up to the insured amount within two months from the date of receipt of the claim list from the liquidator.
However, this will now change.
“I shall be moving amendments to the DICGC Act, 1961 in this session itself 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,” Sitharaman said.
