Good news for customers of troubled banks – The Union Cabinet has now cleared amendments in the Deposit Insurance Credit Guarantee Corporation (DICGC) Act 1961.
The bill states that account holders of troubled banks will now be granted up to Rs. 5 lakh within 90 days of its collapse.
Read on to find out all the details!
Rs 5 Lakh Insurance For Every Customer If Bank Shuts Down; 90 Days Deadline Imposed
The Finance Minister Nirmala Sitharaman has also confirmed that the Union Cabinet has cleared the DICGC Bill 2021. Under this act, the account holders of troubled banks will be given up to Rs. 5 lakh within 90 days of its collapse.
Recently, we reported to you that the Reserve Bank of India has cancelled the license of Bagnan, United Co-operative Bank Ltd, West Bengal.
In this case, it was announced that the depositors don’t need to worry much, as they will receive the full amount of their deposits, thanks to the Deposit Insurance and Credit Guarantee Corporation (DICGC).
However, depositors will receive claim benefits of up to Rs 5 lakh.
RBI also said that in the current situation, the bank would not be able to pay its depositors the full amount of their deposits. The process of liquidation will now begin.
DICGC Act Cleared By Union Cabinet?
As per the proposed legislation, insurance will be provided to all bank deposits and covers all commercial banks. Additionally, foreign bank branches in India will also be covered under it.
As per Ms Sitharaman, the legislation directs that the bank should deposit up to Rs. 5 lakh in each bank. This includes both principal as well as interest. She has also said that 98.3 percent of bank accounts would be fully protected.
The Finance Minister has stated, “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.”
The DICGC Act, 1961 was announced in the Union Budget by Ms. Sitharaman, where she had stated that an increase in insurance cover on bank deposits to Rs. 5 from Rs. 1 lakh will be made effective if in case the bank undergoes liquidation.