The Union Cabinet on Wednesday cleared the Deposit Insurance and Credit Guarantee Corporation Bill 2021 under which depositors of banks under moratorium will be able to access the insurance money of up to ₹5 lakh within 90 days, finance minister Nirmala Sitharaman said briefing the cabinet decision.
All commercial banks and even branches of foreign banks operating in India will come under the purview of this legislation and this will be applicable to banks which are at present under moratorium, the finance minister clarified. “We are not going retrospective. But banks that are presently under moratorium will come under this. And this will be the future process,” Sitharaman said.
Last year, the amount of deposit insurance per individual depositor was increased to ₹1 lakh to ₹5 lakh. Still, accessing the money after a bank goes bust remained a problem. In Budget 2021, the finance minister mentioned in her speech that the government was working towards amending the Deposit Insurance and Credit Guarantee Corporation Act (DICGC) 1961, after which depositors will access their money in an easy and time-bound manner.
In the first 45 days after a bank is placed under a moratorium by the Reserve Bank of India, the bank will collect all their accounts where claims have to be made. Then these will be given to Deposit Insurance and Credit Guarantee Corporation, which will take another 45 days to check the accounts and then hand over the money. “On 91st or 95th day after the bank is placed under moratorium, you will get your money as the new rules will not wait for the eventual liquidation or resolution,” finance minister Nirmala Sitharaman said.
The process of accessing the insurance money can drag to 7-8 years as PMC bank depositors are yet to get their insurance money.
In 2019, the Reserve Bank of India placed Punjab and Maharashtra Cooperative Bank under moratorium. Following the collapse of the PMC Bank, Yes Bank, Lakshmi Vilas Bank also went bust which put thousands of depositors in trouble.
Syndicated From Hindustan Times