In a relief to depositors of banks which have either collapsed or faced financial frauds, the Union Cabinet on Wednesday cleared amendments in the Deposit Insurance Credit Guarantee Corporation (DICGC) Act, under which depositors will get an insurance of Rs 5 lakh on their total deposits within 90 days of the affected bank getting placed under moratorium.
“The Deposit Insurance Credit Guarantee Corporation was created to cater to people facing difficulties after RBI imposes moratoriums on banks. During the cabinet’s meeting it was decided that within 90 days, depositors will receive Rs 5 lakhs of their money,” Union Minister Anurag Thakur told media persons.
Finance Minister Nirmala Sitharaman said that 98.3 per cent of bank accounts would be fully protected within the law.
The DICGC is a subsidiary of the Reserve Bank of India and provides insurance cover on bank deposits. The DICGC (Deposit Insurance and Credit Guarantee Corporation) Act is aimed at minimising troubles faced by depositors of stressed banks like the Punjab and Maharashtra Co-operative (PMC) Bank or Yes Bank and Lakshmi Vilas Bank.
The deposit insurance system covers all public, private, cooperative and foreign banks in India, barring some specific deposits.
The Act will provide a solution to the biggest issue of customers having zero access to their funds for a long period till the RBI lifts the curbs on such banks.