Depositors of PMC, other banks to benefit from DICGC Bill: FM Sitharaman

We want to make sure within 90 days depositors get the money so that small depositors who make up 98% of all depositors will get their money in time, she said

Depositors of Punjab and Maharashtra Cooperative (PMC) Bank, Guru Raghavendra Cooperative Bank that are under stress will benefit from the changes in the Deposit Insurance Credit Guarantee Corporation Act, and will be eligible to withdraw up to Rs 5 lakh within 90 days, said Finance Minister Nirmala Sitharaman.

“(DICGC) Bill is effective from now, but PMC Bank, Guru Raghavendra Bank that are already under stress but which are not under moratorium, which may have administrator sitting and sorting the business out, even their depositors will benefit and get Rs 5 lakh within 90 days,” Sitharaman said while tabling the Bill in Lok Sabha.

The resolution of banks under stress is taking time and as a result the depositors are not getting more than the emergency money for medical treatment, among others, Sitharaman said. “We want to make sure within 90 days depositors get the money so that small depositors who make up 98 per cent of all depositors will get their money in time,” she said.

According to the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021 passed by Lok Sabha today, once a stressed bank is put on moratorium, DICGC will be liable to pay depositors an insured amount of Rs 5 lakh. A list showing the outstanding deposits of each depositor of the insured bank will have to be furnished by the lender within 45 days.

The DICGC, within 30 days of receiving the list, will have to verify the authenticity of the claims made, and ascertain the willingness of each depositor to receive the amount due to him, out of his deposit in the insured bank. The entire process, from the time a bank is placed under moratorium to depositors receiving the insured amount, should not exceed 90 days, according to the DICGC Bill, 2021.

The bill also amends Section 15 of the DICGC Act to enable the corporation to increase the ceiling on the amount of premium paid by banks to DICGC to 15 paisa per annum for Rs 100 worth deposits, with the prior approval of the Reserve Bank of India (RBI).