Depositors of 21 Banks, including PMC Bank, To Receive Max Rs5 Lakh by 29th December: DICGC
Moneylife Digital Team 22 September 2021
Depositors of 21 banks, including Punjab and Maharashtra Cooperative (PMC) Bank, will receive up to Rs5 lakh from the deposit insurance & credit guarantee corporation (DICGC) within 90 days or by 29 December 2021 under the all-inclusive directions (AID). 
 
The DICGC (Amendment) Act, 2021 (30 of 2021), notified in the Gazette of India on 27 August 2021 vide Notification F. No. 8/3/2019-BO.II of that date has been deemed to come into force from 1 September 2021 for banks insured under the DICGC Act.
 
Accordingly, DICGC says it will pay the depositors of the insured banks placed under AID with restrictions on withdrawal of deposits, an amount equivalent to the deposits outstanding of up to a maximum of Rs5 lakh only within a period not exceeding 90 days.
 
"These banks shall submit a claim list by 15th October and update the position as on 29 November 2021 with principal and interest, in a final updated (second) list, to enable DICGC to settle the claim and discharge its insurance liability in full as per norms. Unpaid (updated willingness list) / difference in the amount of deposits up to the eligible amount (as per the final updated list submitted by 29 November 2021) will be paid within 30 days or by 29 December 2021," DICGC says in a release.
 
However, the Corporation clarified that only those depositors who have given willingness to the insured bank would be paid as per Section 18 A of the Act. "...the depositors may contact the said banks and submit the declaration of willingness and also update any other documents or information, if needed by the bank, so that the bank can include their claims in the list by 15 October 2021," it added.
 
The list of banks under the AID includes 11 cooperative banks from Maharashtra, such as PMC Bank, Rupee Cooperative Bank, City Cooperative Bank Ltd, Kapol Cooperative Bank Ltd and Maratha Sahakari Bank Ltd among others.
 
There are five banks from Karnataka, including Bidar Mahila Urban  Co-Op. Bank Ltd, Millath Cooperative Bank Ltd, Sri Gururaghvendra Sahakara Bank Niyamitha, The Mudhol Cooperative Bank Ltd and Deccan Urban Cooperative Bank Ltd.
 
Five states have one bank each in the AID list of DICGC such as Kerala (Adoor Cooperative Urban Bank Ltd), Punjab (Hindu Co-Op. Bank Ltd, Pathankot), Uttar Pradesh (People's Cooperative Bank Ltd), Rajasthan (Sikar Urban Co-Op. Bank Ltd) and Madhya Pradesh (Garha Cooperative Bank Ltd).
 
Interestingly, the inclusion of PMC Bank and Gururaghvendra Sahakara Bank Niyamitha in the AID list has been done as an exception. This is because these are not liquidated as per the requirement of the DICGC Act.

When the PMC Bank crisis started in 2019, Union finance minister (FM) Nirmala Sitharaman had said that the Rs1 lakh deposit insurance could be invoked only when one treats the matter of PMC Bank as a closed case and not as a going concern.
Speaking with media on 14 October 2019, the FM had said, "If the attempt is to keep it as a going concern, then you cannot invoke it (deposit insurance) and not give that Rs1 lakh. This is a hard technical fact. The attempt by RBI is to see if it can be kept going, and everybody's payment is made."

However, while tabling the Bill in Lok Sabha, the minister had said, "(The) DICGC Bill is effective from now, but PMC Bank, and 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 Rs5 lakh within 90 days."

The extent of bank deposits insured per depositor shot up from Rs30,000 (since 1980) to Rs1 lakh (in 1993) after the securities scam took down two small banks, roiled the entire banking system, and targeted RBI's failed supervision. It was increased to Rs5 lakh last year after the amendment in the DICGC Act.

Here is the notification, list of banks under AID and form to be submitted by depositors...
 
 
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