New Delhi | Jagran Business Desk: The Union Cabinet on Wednesday cleared amendments to the Deposit Insurance Credit Guarantee Corporation (DICGC) Act (DICGC) 1961. This has brought major relief for depositors in the stressed banks such as Punjab and Maharashtra Co-operative Bank, Yes Bank, and Lakshmi Vilas Bank.

Informing about this, Finance Minister Nirmala Sitharaman in a press release said “The Deposit Insurance Credit Guarantee Corporation Bill, 2021 has been cleared by the Cabinet today.”

She also added “Under DICGC Bill 2021, 98.3 per cent of all deposits will get covered and in terms of deposit value, 50.9 per cent deposit value will be covered. Global deposit value is only 80 per cent of all deposit accounts. It only covers 20-30 per cent of the deposit value.”

As per the new amendment in the DICGC Act, depositors in stressed banks must receive insurance on their bank deposits - of up to Rs 5 lakh - within 90 days. Each depositor's bank deposit is insured up to Rs. 5 lakh in each bank (for both principal & interest).

For the unversed DICGC is a subsidiary of the Reserve Bank of India (RBI) that provides insurance cover on bank deposits. It covers all public, private, cooperative, and foreign banks in India, leaving out some specific deposits.

Earlier, depositors in stressed banks faced issues accessing their own deposits after the Central Bank imposed certain restrictions over withdrawal. The amendment to the DICGC Act, however, addressed this issue. This is the second time the government has taken a step to protect the depositors.

Previously, Finance minister Nirmala Sitharaman announced an increase in insurance cover on bank deposits to Rs 5 from Rs 1 lakh, in case a bank faces licence cancellation and liquidation.

“I shall be moving amendments to the DICGC Act, 1961 in this session itself to streamline the provisions, so that if a bank is temporarily unable to fulfill its obligations, the depositors of such a bank can get easy and time-bound access to their deposits to the extent of the deposit insurance cover,” Sitharaman had said.

Posted By: Sugandha Jha