Depositors of PMC, Other Stressed Banks To Benefit from DICGC Bill: FM
Moneylife Digital Team 09 August 2021
The Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021 which was passed in the Lok Sabha on Monday will also help the Reserve Bank of India (RBI) in the process of dealing with stressed banks. 
The amendment would give RBI-run DICGC greater say in a stressed bank's liquidation process. DICGC has now been given priority over creditors of the stressed bank.
Once the amendment has been implemented, DICGC's balance sheet will improve as the Corporation will be free to charge higher insurance premiums from banks. The current cap of 15 paise per Rs100 of deposit will be removed as per the amendment.
The amendment will provide backup to the Centre's move to raise the insurance coverage for individual depositors in banks from Rs 1 lakh to Rs 5 lakh. This will cover most depositors in the country as over 98% of account holders in India have less than 5 lakh rupees stored as savings in banks.
Depositors of Punjab and Maharastra 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 Rs5 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 Rs5 lakh within 90 days,” Ms 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, Ms Sitharaman said. 
“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.
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 Rs5 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.
Currently, RBI is placed under immense pressure from depositors demanding a quick resolution whenever it places a stressed bank under a moratorium. 
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