The Cabinet has approved changes to the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act that will allow depositors to withdraw up to Rs 5 lakh in 90 days.
The announcement will cover 98.3 per cent of all deposit accounts and 50.9 per cent of the deposit value, Finance Minister Nirmala Sitharaman said. This compares with global deposit insurance coverage of 80 per cent for all accounts, and 20-30 per cent coverage by deposit value.
Even if there is a moratorium on a bank, this measure will step in, Sitharaman said. The first 45 days, after the bank is placed under moratorium by the Reserve Bank of India, will go for the lender to collect all depositor claims and submit it to DICGC. The corporation will process the claims real time, and within 90 days the process will be completed even when the bank resolution is ongoing.
This will also cover banks that have been already placed under moratorium.
Banks will have to pay a premium of 12 paise per Rs 100 worth of deposits from 10 paise earlier. The law has a provision that the premium will not be hiked beyond Rs 15 per Rs 100 of deposits.
“This will be the biggest relief we can offer those small depositors and nearly covering 98.3% depositors,” Sitharaman said.
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