The Deposit Insurance and Credit Guarantee Corporation (DICGC) (Amendment) Bill, 2021, was passed by the Lok Sabha yesterday. The DICGC Act amendments will immediately benefit the thousands of depositors of banks like Lakshmi Vilas Bank, PMC Bank, and Yes Bank.
Banks under stress take a long time to provide any resolution, and depositors do not get more than the emergency money for medical treatment. Nirmala Sitharaman said that the government wants to ensure that small depositors, who make up 98 percent of all depositors, will get their money within 90 days.
According to the DICGC (Amendment) Bill, 2021, DICGC will be liable to pay the depositors an insured amount of Rs 5 lakh once a bank that is stressed is on a moratorium. Also, a list clearly showing the outstanding deposit amounts of each of the depositors of the insured bank must be provided by the lender within 45 days.
DICGC will have to cross-check the authenticity of each of these claims made within 30 days of receiving the list. DICGC has to establish if the depositor is willing to take the amount due to him, out of his deposit in the bank. The entire time that this said process takes should not exceed 90 days.
Section 15 of the DICGC Act was amended to enable the corporation to increase the ceiling on the amount of premium paid by banks to DICGC to 15 paise for Rs 100 worth deposits per annum, with the prior approval of the RBI, Reserve Bank of India.
The finance minister Nirmala Sitharaman announced that if the license of any bank gets cancelled and the liquidation process happens, the insurance cover will be Rs 5 lakhs on each deposit from the earlier amount of Rs 1 lakh.
DICGC is a subsidiary of the Reserve Bank of India and provides an insurance cover on deposits made in banks. This insurance system covers all private banks, public banks, cooperative banks, and foreign banks in India, except for some specific kinds of deposits.