Depositors to get up to Rs 5 lakh within 90 days of banks being put under moratorium: Centre
With the recent amendment, depositors will get an insurance of Rs 5 lakh even if a bank is put under RBI's watch and its operations are suspended.The law will protect 98.3 percent of the bank accounts
Union Cabinet on Wednesday cleared amendments in Deposit Insurance and Credit Guarantee Corporation Act, 1961, (DICGC Act),facilitating any bank depositors to get Rs 5 lakh on their deposits within 90 days of the moratorium..
It means that depositors of those banks under a moratorium will no longer have to wait for the Reserve Bank of India (RBI) to rescue them in order to access their funds.
"Deposit Insurance Credit Guarantee Corporation was created in case people faced difficulties after RBI imposes moratoriums on banks. Today's Cabinet meeting has decided that within 90 days, depositors will receive Rs 5 lakhs of their money," Union Minister Anurag Thakur said while making the announcement.
With the recent amendment, depositors will get an insurance of Rs 5 lakh even if a bank is put under RBI's watch and its operations are suspended.
Today, Union Finance Minister Nirmala Sitharaman said the Cabinet has cleared the Deposit Insurance Credit Guarantee Corporation (DICGC) Bill, which would insure an amount of Rs 5 lakh stored in bank accounts. The law will protect 98.3 percent of the bank accounts, Sitharaman said..
“Normally, it takes around eight to 10 years after complete liquidation to get money under insurance; but now, even if there is a moratorium, within 90 days, the process will definitely be completed, giving relief to depositors,” Sitharaman
The scheme is significant for the Indian financial system to regain the lost trust of smaller depositors in many failed banks.
Last year, the central government had raised insurance cover on deposit to Rs 5 lakh from Rs 1 lakh to support account holders of stressed lenders like the Punjab and Maharashtra Co-operative Bank.
Meanwhile, the government on Wednesday also cleared amendments to the Limited Liability Partnership (LLP) Act, with an aim to decriminalise various provisions under the law and foster the ease of doing business in the country.
Changes include removing criminal action for failure to comply with provisions of the Act will help about 2.30 lakh such firms in the country.
With the approval, the total number of penal provisions in the Act will be reduced to 22, the number of compoundable offences will be only seven, the number of non-compoundable offences will be only three, and the number of defaults will be only 12, among others, said Sitharaman.