The Rajya Sabha on Wednesday passed the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill amid opposition uproar, with Finance Minister Nirmala Sitharaman saying the proposed legislation will help small depositors, including those of the stressed PMC Bank. The bill was passed after a short debate.
The Bill proposes that even if a bank is temporarily unable to fulfil its obligations due to restrictions such as moratorium, depositors can access their deposits to the extent of the deposit insurance cover through interim payments by the Deposit Insurance and Credit Guarantee Corporation (DICGC). For this, the Bill seeks to insert a new Section in the DICGC Act, 1961.
Replying to a brief debate, Sitharaman said the legislation would provide relief to small bank depositors. She said the proposed legislation will also help depositors of 23 cooperative banks which are under stress.
"PMC Bank depositors will also benefit from this bill," she said. Thousands of depositors of the fraud-hit multi-state cooperative bank are facing hardship. The PMC Bank is currently under reconstruction. The bill also seeks to amend Section 15 of the DICGC Act to enable the Corporation to increase the ceiling on the amount of premium, with the prior approval of the Reserve Bank of India (RBI).
Besides, it will also provide that the DICGC may defer or vary the receipt of repayments due to it from the insured bank and to empower the Corporation to charge penal interest in case of delay in repayment by the banks to the Corporation.
Though the RBI and the central government keep monitoring the health of all banks, there have been numerous recent cases of banks, especially cooperative banks, being unable to fulfil their obligations towards depositors due to the imposition of moratorium by the RBI.
Earlier this week, the Union Cabinet cleared amendments to the DICGC Act. Last year, the government had increased insurance cover on deposits by five times to Rs 5 lakh.
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