{"id":122300,"date":"2021-07-30T19:25:05","date_gmt":"2021-07-30T13:55:05","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=122300"},"modified":"2021-07-30T19:25:05","modified_gmt":"2021-07-30T13:55:05","slug":"changes-to-deposit-insurance","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/changes-to-deposit-insurance\/","title":{"rendered":"Changes to deposit insurance"},"content":{"rendered":"<p><strong>Source<\/strong>:\u00a0<a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-what-is-deposit-insurance-law-changes-benefit-account-holders-7428921\/\">Indian Express\u00a0 , <\/a><a href=\"https:\/\/epaper.livemint.com\/Home\/ShareArticle?OrgId=307279d3fc7&amp;imageview=0\">Live Mint<\/a><\/p>\n<p><strong>Relevance<\/strong>: Deposit Insurance Credit Guarantee Corporation (DICGC) bill will protect the interest of consumers.<\/p>\n<p><strong>Synopsis:<\/strong> How the New Amendments to the <strong><a href=\"https:\/\/forumias.com\/blog\/deposit-insurance-and-credit-guarantee-corporation-dicgc-bill-2021\/\">Deposit Insurance Credit Guarantee Corporation<\/a> (DICGC) Act<\/strong> will help depositors cause?<\/p>\n<h5><strong>Background<\/strong><\/h5>\n<ul>\n<li>Recent events related to Punjab &amp; Maharashtra Co-operative (PMC) Bank, Yes Bank, and Lakshmi Vilas Bank have put a spotlight on the issue<strong>\u00a0of deposit insurance. <\/strong><\/li>\n<li>Consequently, the Union Cabinet cleared amendments to the <strong>Deposit Insurance Credit Guarantee Corporation (DICGC) Act.<\/strong><\/li>\n<li>It brings relief to depositors of stressed banks placed under a moratorium.<\/li>\n<li>The amendment will help depositors access their deposits up to \u20b95 lakh within just 90 days if their bank gets in trouble, and is placed under a moratorium.<\/li>\n<li>The new rule will apply to all commercial banks and branches of foreign banks operating in India.<\/li>\n<\/ul>\n<h5><strong>What is deposit insurance?<\/strong><\/h5>\n<ul>\n<li>In an unlikely event of a bank failure in India, a depositor can claim a maximum of Rs 5 lakh per account as insurance cover.<\/li>\n<li>The cover of Rs 5 lakh per depositor is provided by <strong>the Deposit Insurance and Credit Guarantee Corporation (DICGC),<\/strong> which is a fully owned subsidiary of the Reserve Bank of India.<\/li>\n<li>Depositors having more than Rs 5 lakh in their account have no legal recourse to recover funds in case a bank collapse.<\/li>\n<li><strong>The depositors enjoy the highest safety on their funds parked with banks<\/strong>, unlike the equity and bond investors in the banks.<\/li>\n<\/ul>\n<h5><strong>How will the changes benefit account holders?<\/strong><\/h5>\n<ol>\n<li>First, the depositors normally end up waiting for 8-10 years.\u00a0Now depositors will get insurance money <strong>within 90 days <\/strong>in the event of a bank coming under the moratorium, without waiting for eventual liquidation of the distressed banks.\n<ul>\n<li>Within the first 45 days of the bank being put under a moratorium, the DICGC would collect all information relating to deposit accounts.<\/li>\n<li>In the next 45 days, it will review the information and repay depositors closer to the 90th day.<\/li>\n<\/ul>\n<\/li>\n<li>Second<strong>, this will cover banks already under the moratorium<\/strong> and those that <strong>could come under the moratorium.\u00a0<\/strong>This will be beneficial to depositors of PMC Bank, under moratorium since September 2019, with depositors not being able to access funds beyond Rs 1 lakh.<\/li>\n<\/ol>\n<h5><strong>Who pays for this insurance?<\/strong><\/h5>\n<ul>\n<li>Deposits in public and private sector banks, local area banks, small finance banks, regional rural banks, cooperative banks, Indian branches of foreign banks, and payments banks are all <strong>insured by the DICGC. <\/strong><\/li>\n<li>The premium for this insurance is paid by banks to the DICGC and <strong>not be passed on to depositors. <\/strong><\/li>\n<li>Banks currently pay a minimum of 10 paise on every Rs 100 worth of deposits to the DICGC as premium, which is <strong>now being raised to a minimum of 12 paise<\/strong>.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Source:\u00a0Indian Express\u00a0 , Live Mint Relevance: Deposit Insurance Credit Guarantee Corporation (DICGC) bill will protect the interest of consumers. Synopsis: How the New Amendments to the Deposit Insurance Credit Guarantee Corporation (DICGC) Act will help depositors cause? Background Recent events related to Punjab &amp; Maharashtra Co-operative (PMC) Bank, Yes Bank, and Lakshmi Vilas Bank have&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/changes-to-deposit-insurance\/\">Continue reading <span class=\"screen-reader-text\">Changes to deposit insurance<\/span><\/a><\/p>\n","protected":false},"author":10316,"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-122300","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":1700437420},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/122300","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\/10316"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=122300"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/122300\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=122300"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=122300"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=122300"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}