With the Union cabinet clearing the Deposit Insurance & Credit Guarantee Corporation (DICGC) Bill 2021, depositors can expect to receive their money back within 90 days from Reserve Bank of India (RBI) declaring moratorium on their bank.
In a media briefing, finance minister Nirmala Sitharaman says, "The bill insures bank deposits such as savings, fixed deposits (FDs), current or recurring deposits. It also covers commercial, public, private sector banks and branches of a foreign bank in India. Each depositor's deposits in the banks are insured up to a maximum of Rs5 lakh in each bank."
"Each depositor's bank deposit is insured up to Rs5 lakh in each bank for both principal and interest. Increase of insured amount to Rs5 lakh from Rs1 lakh will cover 98.3% of all deposit accounts and 50.9% of deposit value," the minister added.
Normally, the FM says, it takes eight to 10 years after complete liquidation to get money under insurance, however, "even if there is a moratorium, within 90 days, the process will definitely be completed, giving relief to depositors".
Globally, deposit insurance coverage is only 80% of all deposit accounts, covering only 20% - 30% of the deposit value. With the Union cabinet's approval to DICGC bill, corresponding figures in India become 98.3% and 50.9%, respectively.
The Union cabinet also cleared the Limited Liability Partnership (LLP) Amendment Bill.
According to Ms Sitharaman, a lot of changes are being made in the Companies Act, decriminalising many sections and improving ease of doing business for companies. "A similar treatment had to be given for LLPs. With the LLP Amendment Bill, we will have only 22 penal provisions, seven compoundable offences, and three non-compoundable offences," she added.
A total of 12 offences are to be decriminalised for LLPs, while three sections will be omitted. These amendments will bring to LLPs an equal playing field, compared to large companies which come under the Companies Act.
"Between large companies that are well-regulated and small proprietorships, LLPs did not have benefit of either simplified regulation or ease of practice under proprietorship. With today's cabinet decision, we are bridging the gap and making LLPs more attractive, easy to handle," the finance minister says.
Ms Sitharaman also said that the Gandhinagar-based International Institute of Financial Services Centres Authority has signed a memorandum of understanding (MoU) with the International Organisation of Securities Commissions and International Association of Insurance Supervisors, which are one of the biggest multilateral forums and have 124 signatories