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Cabinet okays amendment to DICGC Act

The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman holding a press conference on Cabinet Decisions, in New Delhi on July 28, 2021.

The Union Cabinet has cleared amendments in the Deposit Insurance and Credit Guarantee Corporation Act, 1961, to provide relief to depositors in stressed banks. Once the amendments are passed depositors of banks under moratorium will no longer be required to wait for the Reserve Bank of India to rescue the bank to access their funds. The account holders will get access to up to Rs 500,000 within 90 days of a bank coming under moratorium. Finance Minister Nirmala Sitharaman, said banks that are under moratorium at present will come under the proposed law and this will be the future process. She said the aim is to minimize the hurdles faced by depositors of banks like PMC Bank, Yes Bank and Lakshmi Vilas Bank. At least 98.3% of all deposit accounts will get covered under it, in terms of value of the deposits over 50% coverage. The central government last year raised the deposit insurance cover to ₹500,000 from Rs 100,000. The amendment to the Deposit Insurance and Credit Guarantee Corporation Act, 1961 was announced in the budget 2021. Deposit Insurance and Credit Guarantee Corporation is a wholly-owned subsidiary of the RBI and agency provides insurance cover for bank deposit holders when the bank fails to pay its depositors.  The amendment is expected to be introduced in the current monsoon session, Nirmala Sitharaman said.

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