Parliament passes DICGC amendment Bill

The Rajya Sabha passed the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021 last week.

August 09, 2021 04:33 pm | Updated 05:27 pm IST - New Delhi:

Parliament building in New Delhi.

Parliament building in New Delhi.

The Lok Sabha on Monday passed a Bill that seeks to ensure that account holders will get up to ₹5 lakh within 90 days of the RBI imposing moratorium on their banks from the Deposit Insurance and Credit Guarantee Corporation (DICGC).

The Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021 was passed by a voice vote amid an uproar by Opposition parties over various issues, including the Pegasus snooping row and farm laws.

The Rajya Sabha passed the Bill last week.

Finance Minister Nirmala Sitharaman, in her brief statement, said the legislation will benefit small depositors, including those of the Punjab and Maharashtra Cooperative (PMC) Bank.

The benefits will also accrue to the depositors of 23 cooperative banks, which are in financial stress and on which the Reserve Bank of India (RBI) has imposed certain restrictions, she said.

Ms. Sitharaman said the interest of the small depositors will have to be kept in mind, adding that Prime Minister Narendra Modi has increased the insurance amount for them from ₹1 lakh to ₹5 lakh and within 90 days of moratorium being declared on a bank and also for those who are already under stress, the money will be available.

Once the Bill becomes law, it will provide immediate relief to lakhs of depositors, whose money is parked in stressed lenders such as the PMC Bank and other small cooperative banks.

According to the current provisions, the deposit insurance of up to ₹5 lakh comes into play when the licence of a bank is cancelled and the liquidation process starts.

DICGC, a wholly-owned subsidiary of the RBI, provides an insurance cover on bank deposits.

At present, it takes 8-10 years for the depositors of a stressed bank to get their insured money and other claims.

Though the RBI and the Centre keep monitoring the health of all banks, there have been numerous recent cases of banks, especially cooperative banks, being unable to fulfil their obligations towards the depositors due to the imposition of a moratorium by the RBI.

Last year, the government increased the insurance cover on deposits by five times to ₹5 lakh. The enhanced deposit insurance cover of ₹5 lakh came into effect from February 4, 2020.

In September 2019, the RBI superseded the board of the PMC Bank and imposed various regulatory restrictions after financial irregularities came to light.

Top News Today

Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.