Despite opposition protests, the Rajya Sabha passed the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill on Wednesday, with Finance Minister Nirmala Sitharaman saying that the new law will benefit small depositors, particularly those of the troubled PMC Bank. The bill was passed after a short debate.
Even if a bank is temporarily unable to meet its commitments owing to limitations such as a moratorium, the Bill provides that depositors can access their funds up to the amount of deposit insurance coverage through interim payments made by the Deposit Insurance and Credit Guarantee Corporation (DICGC). The Bill proposes to amend the DICGC Act of 1961 to include a new section for this purpose.
In response to a brief discussion, Sitharaman stated that the bill will help small bank depositors. She also added that the new law will assist depositors of 23 cooperative banks that are experiencing financial difficulties.
‘PMC Bank depositors will also benefit from this bill,’ she said. Thousands of depositors at the multi-state cooperative bank have been affected by the theft. The PMC Bank is currently being rebuilt. The bill also proposes to modify Section 15 of the DICGC Act to allow the Corporation to increase the premium cap with the Reserve Bank of India’s prior permission.
Also Read: India’s first indigenous aircraft carrier INS Vikrant sets off for sea trials from Kochi
It will also allow the DICGC to defer or alter the receipt of repayments owed to it from insured banks, as well as enable the Corporation to levy punitive interest if banks fail to reimburse the Corporation on time.
Despite the fact that the RBI and the central government maintain a close eye on all banks’ health, there have been several recent examples of banks, particularly cooperative banks, being unable to meet their commitments to depositors owing to the RBI’s imposition of a moratorium.
The Union Cabinet approved changes to the DICGC Act earlier this week. Last year, the government extended deposit insurance coverage to Rs 5 lakh, a fivefold increase.
Post Your Comments