In a move which will provide relief to depositors of troubled banks, the Union Cabinet on Wednesday cleared amendments in the Deposit Insurance Credit Guarantee Corporation (DICGC) Act 1961, under which account holders of the affected bank will get up to ₹ 5 lakh within 90 days of its collapse.
Each depositor’s bank deposit is insured up to Rs 5 lakh in each bank, Union Finance Minister Nirmala Sitharaman said today. This was announced after the Union Cabinet had cleared Deposit Insurance and Credit Guarantee Corporation Bill 2021 (DICGC Bill 2021). The cabinet has decided that within 90 days, depositors will receive Rs 5 lakh of their money if the bank is placed under moratorium, Union Minister Anurag Thakur said.
The announcement will cover 98.3 per cent of all deposit accounts and 50.9 per cent of the deposit value, Finance Minister Nirmala Sitharaman said on Wednesday. This compares with the global deposit insurance coverage of 80 per cent of all accounts and 20-30 per cent of the deposit value.
“Even if there is a moratorium on a bank…this measure will set in,” Sitharaman said. In the first 45 days, after the bank is placed under moratorium by the Reserve Bank of India (RBI), the lender will collect all depositor claims and submit it to DICGC. The corporation will process the claims in real time. Within 90 days, the process will be completed, even when the bank resolution is ongoing.
- Each depositor’s bank deposit is insured up to Rs. 5 lakh in each bank (for both principal & interest). Increase of insured amount from Rs. 1 lakh to Rs. 5 lakh will cover 98.3 per cent of all deposit accounts and 50.9 per cent of deposit value,” said FM Sitharaman, according to the Ministry of Finance.
- “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 was quoted as saying by ANI.
