{"id":122091,"date":"2021-07-29T20:56:28","date_gmt":"2021-07-29T15:26:28","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=122091"},"modified":"2021-07-30T10:46:49","modified_gmt":"2021-07-30T05:16:49","slug":"depositors-to-get-up-to-rs-5-lakh-within-90-days-if-bank-under-moratorium","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/depositors-to-get-up-to-rs-5-lakh-within-90-days-if-bank-under-moratorium\/","title":{"rendered":"Depositors to get up to Rs 5 lakh within 90 days if bank under moratorium"},"content":{"rendered":"<p><b>Source:\u00a0<a href=\"https:\/\/epaper.livemint.com\/Home\/ShareArticle?OrgId=297554a63aa&amp;imageview=0\" target=\"_blank\" rel=\"noopener\">The Hindu<\/a> and <a href=\"https:\/\/www.business-standard.com\/article\/economy-policy\/depositors-to-get-up-to-rs-5-lakh-within-90-days-if-bank-under-moratorium-121072801218_1.html\" target=\"_blank\" rel=\"noopener\">Business Standard<\/a><\/b><b><\/b><\/p>\n<p><strong>Relevance<\/strong>: The DICGC Bill provide big relief to small depositors<\/p>\n<h5><b>Synopsis:\u00a0<\/b><\/h5>\n<p>The Union Cabinet has cleared the Deposit Insurance and Credit Guarantee Corporation (DICGC) Bill, 2021 which will allow depositors to withdraw up to Rs 5 lakh in 90 days.<\/p>\n<h5><strong>About the Deposit Insurance and Credit Guarantee Corporation (DICGC) Bill, 2021<\/strong><\/h5>\n<ul>\n<li>The DICGC Bill, 2021, will cover banks that have been already placed under a moratorium and will insure savings deposits, fixed deposits, current and recurring deposits.<\/li>\n<\/ul>\n<p><strong>Procedure:<\/strong><\/p>\n<figure id=\"attachment_122105\" aria-describedby=\"caption-attachment-122105\" style=\"width: 620px\" class=\"wp-caption alignnone\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-122105\" src=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2021\/07\/DICGC-Bill.jpg?resize=620%2C450&#038;ssl=1\" alt=\"DICGC Bill\" width=\"620\" height=\"450\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2021\/07\/DICGC-Bill.jpg?w=620&amp;ssl=1 620w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2021\/07\/DICGC-Bill.jpg?resize=300%2C218&amp;ssl=1 300w\" sizes=\"auto, (max-width: 620px) 100vw, 620px\" \/><figcaption id=\"caption-attachment-122105\" class=\"wp-caption-text\">Source: Business Standard<\/figcaption><\/figure>\n<ul>\n<li>Each depositor\u2019s balance of \u20b95 lakh is guaranteed for both principal and interest.<\/li>\n<li>In the first 45 days, after the bank is placed under a moratorium by the Reserve Bank of India (RBI), the lender will collect all depositor claims and submit them to DICGC.<\/li>\n<li>The corporation will process the claims in real time. Within 90 days, the process will be completed, even when the bank resolution is ongoing.<\/li>\n<li>For delay in payment of premium, the bank is liable to pay interest at the rate of 8 percent above the Bank Rate on the default amount from the beginning of the relevant half-year till the date of payment.<\/li>\n<\/ul>\n<h5><strong>What is DICGC and how it will function?<\/strong><\/h5>\n<ul>\n<li>DICGC is a fully owned subsidiary of the Reserve Bank of India (RBI) and was established in the year 1978.<\/li>\n<li>DICGC collects <strong>insurance premiums from the insured banks<\/strong> for the administration of the deposit insurance system. The premiums to be paid by the insured banks are computed on the basis of their assessable deposits.<\/li>\n<li>The Insured banks pay advance insurance premiums to the corporation semi-annually within two months from the beginning of each financial half-year, based on their deposits as at the end of the previous half-year.<\/li>\n<li>The<strong> premiums<\/strong> paid by the insured banks to the DICGC are required to be <strong>borne by the banks themselves and are not passed on to the depositors<\/strong>.<\/li>\n<\/ul>\n<h5><strong>What is Deposit Insurance Fund (DIF)?<\/strong><\/h5>\n<p>The amount in <strong>Deposit Insurance Fund (DIF) is used for the settlement of claims<\/strong> of depositors of banks under liquidation, reconstruction and amalgamation.<\/p>\n<p>The DIF is <strong>built out of the premium paid by insured banks<\/strong> and the <strong>coupon income received on investments in central government securities<\/strong>.<\/p>\n<h5><strong>Significance of the changes:<\/strong><\/h5>\n<ul>\n<li>This will be the <strong>biggest relief to small depositors<\/strong>, nearly covering 98.3 percent of depositors and 50.9 percent of the deposit value.\n<ul>\n<li>Globally, the deposit insurance coverage was around 80 percent of all accounts and 20-30 percent of the deposit value.<\/li>\n<\/ul>\n<\/li>\n<li>This would <strong>address the woes of depositors<\/strong> who were not able to get their funds due to problems of banks.<\/li>\n<li>Normally, it takes <strong>about 8-10 years, after the complete liquidation of the bank, <\/strong>to get the depositors&#8217; money. But the bill will provide it within 90 days of the RBI\u2019s imposition of a moratorium on a bank\u2019s operations.<\/li>\n<\/ul>\n<h5><strong>Challenges:<\/strong><\/h5>\n<ul>\n<li>The <strong>revival of banks facing problems will become difficult<\/strong> as they will have to return money to the depositors.<\/li>\n<li><strong>Although<\/strong> the change will <strong>cover 98.3 percent of accounts<\/strong>, there is certainly scope for raising the limit further. Since the <strong>middle-income depositors may still not get full benefit<\/strong> in the case of a failure of a bank.\n<ul>\n<li>Currently, they rely upon a merger with another bank as a bailout to take care of customers\u2019 money.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Source:\u00a0The Hindu and Business Standard Relevance: The DICGC Bill provide big relief to small depositors Synopsis:\u00a0 The Union Cabinet has cleared the Deposit Insurance and Credit Guarantee Corporation (DICGC) Bill, 2021 which will allow depositors to withdraw up to Rs 5 lakh in 90 days. About the Deposit Insurance and Credit Guarantee Corporation (DICGC) Bill,&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/depositors-to-get-up-to-rs-5-lakh-within-90-days-if-bank-under-moratorium\/\">Continue reading <span class=\"screen-reader-text\">Depositors to get up to Rs 5 lakh within 90 days if bank under moratorium<\/span><\/a><\/p>\n","protected":false},"author":10311,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216],"class_list":["post-122091","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704711276},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/122091","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10311"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=122091"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/122091\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=122091"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=122091"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=122091"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}