To provide relief to depositors in stressed banks, Union Cabinet on Wednesday cleared the amendments in Deposit Insurance and Credit Guarantee Corporation Act, 1961, (DICGC Act). The aim is to minimise the hurdles faced by depositors of banks like the Punjab and Maharashtra Co-operative (PMC) Bank, Yes Bank and Lakshmi Vilas Bank. Depositors of banks under moratorium the will no longer have to wait for the Reserve Bank of India (RBI) to rescue the bank to access their funds.
The central government raised the deposit insurance cover to ₹5 lakh even if the bank is put under RBI’s watch, and its regular operations are suspended.
“Keeping the interest of depositors in mind, the government had increased the deposit insurance cover from ₹1 lakh to ₹5 lakh last year. However, the claim could be made only in dire situations—if a bank’s licence was cancelled and its liquidation proceedings were started,” said Adhil Shetty, CEO, BankBazaar, a marketplace for financial products.
With inputs from News18