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Cabinet approves bill to settle depositors' claim in 90 days in case of bank collapse

Cabinet approves bill to settle depositors' claim in 90 days in case of bank collapse

With the amendment to the Deposit Insurance and Credit Corporation Amendment Bill, 2021, the depositors will be able to withdraw the insured amount of up to Rs 5 lakh in a period of 90 days

 Several banks like the Punjab and Maharashtra Co-operative (PMC) Bank, Yes Bank and Lakshmi Vilas Bank collapsed in the last couple of years and moratorium had to be imposed on them Several banks like the Punjab and Maharashtra Co-operative (PMC) Bank, Yes Bank and Lakshmi Vilas Bank collapsed in the last couple of years and moratorium had to be imposed on them

In order to provide immediate relief to the bank depositors, the Union cabinet on Wednesday cleared the Deposit Insurance and Credit Corporation Amendment Bill, 2021 which will ensure speedy claim to the depositors in case a moratorium is imposed on the bank due to any discrepancies or unfair practice. The Bill will be tabled in the ongoing monsoon session of the Parliament.  

With the amendment, the depositors will be able to withdraw the insured amount of up to Rs 5 lakh in a period of 90 days. It may be noted that the government had enhanced the deposit insurance cover to Rs 5 lakh from Rs one lakh for the bank customers last year.

Also Read: Good news for PMC, LVB, Yes Bank customers; Cabinet clears amendments to DICGC Act

Announcing the Cabinet decision, finance minister Nirmala Sitharaman said, "Accessing the depositors' money has been an issue. Proven history says that it takes eight to ten years and only after the complete liquidation they get the money. now we are saying that even if there is a moratorium on the banks and everything is frozen, this measure will set in."

"In the first 45 days, the bank in distress will collect all the claims and hand it over the insurance company, which will evaluate them in real time. Around the 90th day the, the money will be transferred to the depositor, and they will not have to wait till the eventual liquidation of the bank," Sitharaman added.    

Several banks like the Punjab and Maharashtra Co-operative (PMC) Bank, Yes Bank and Lakshmi Vilas Bank collapsed in the last couple of years and moratorium had to be imposed on them. Large number of PMC bank account holders still do not have access to their accounts.

Sitharaman also said that the cabinet has also approved Limited Liability Partnership Amendment to decriminalise the 2008 Act.

Also Read: Nearly Rs 49,000 cr lying unclaimed with banks, insurers: Minister Bhagwat Karad