Cabinet clears Bill to insure bank deposits up to Rs 5 lakh

Cabinet clears Bill to insure bank deposits up to Rs 5 lakh

Tribune News Service/PTI

New Delhi, July 28

In a bid to ensure timely support to depositors of stressed banks, the Union Cabinet on Wednesday approved amendment to the DICGC Act to provide account holders access to up to Rs 5 lakh funds within 90 days of a bank coming under moratorium.

Finance Minister Nirmala Sitharaman in her Budget speech had announced that changes will be made to the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961.

Nod to changes in LLP Act

  • The Cabinet on Wednesday approved amendments to the Limited Liability Partnership (LLP) Amendment Act to decriminalise as many as a dozen offences as also scrap some sections
  • These amendments will bring to LLPs an equal playing field compared to large companies which come under the Companies Act as the LLPs did not have the benefit of either simplified regulation or ease of practice under proprietorship

“The Deposit Insurance and Credit Guarantee Corporation Bill 2021 has been cleared by the Cabinet today,” Sitharaman said while sharing details about the Cabinet meeting. The Bill is expected to be introduced in the monsoon session, she said.

Once the Bill becomes law, it will provide immediate relief to thousands of depositors, who had their money parked in stressed lenders such as PMC Bank and other small cooperative banks.

The Deposit Insurance Credit Guarantee Corporation was created to help those who faced difficulties after the RBI imposed moratoriums on banks.

In case of collapsed banks, customers will no longer face the problem of zero access to funds till the RBI lifts the curbs on such banks. The Rs 5 lakh safety net should cover over 95% of the depositors. It will also mean the banks will have to pay a slightly higher premium.

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