Union Cabinet has cleared a legislation to give relief to clients of banks facing moratoriumIn a move which will provide relief to depositors of struggling banks, the Union Cabinet on Wednesday cleared modifications in the Deposit Insurance Coverage Credit Guarantee Corporation (DICGC) Act 1961, under which account holders of the impacted bank will get up to Rs 5 lakh within 90 days of its collapse.The Union Cabinet has cleared the DICGC Costs 2021, Finance Minister Nirmala Sitharaman informed media persons after the cabinet meeting.The proposed legislation provides insurance coverage to all bank deposits and covers all commercial banks, Ms Sitharaman told reporters.
She included that even foreign bank branches in India are covered under it.Under the legislation, bank deposits approximately Rs 5 lakh will be guaranteed in each bank (inclusive of both principal in addition to interest, Ms Sitharaman said, including that 98.3 percent of checking account would be completely protected.
Normally, it takes around eight to ten years after complete liquidation to get money under insurance coverage; now, even if there is a moratorium, within 90 days, the procedure will definitely be finished, providing relief to depositors, the Financing Minister said.The modification to the DICGC Act, 1961 had actually been revealed in the Union Budget by Ms Sitharaman, where she had stated that a boost in insurance cover on bank deposits to Rs 5 from Rs 1 lakh will be made reliable, in case a bank deals with liquidation.