The Deposit Insurance and Credit Guarantee Corporation (DICGC) was established in 1961 and is a wholly-owned branch of the Reserve Bank of India (RBI). It provides deposit insurance for all bank deposits such as savings accounts, current accounts, Fixed accounts and Recurring accounts. If the bank goes bankrupt or placed under moratorium, this new bill will come into the picture and will provide account holders with access rights of up to Rs. 5 lacs compared to Rs. 1 lac earlier, including principal and interest within just 90 days. This increase was achieved after a lapse of 27 years, because it has remained the same since 1993. The 90 days are divided into two periods 45 days each, the first 45 days will be delivered by the bank in trouble to the insurance company, and all the information on the amount of the claim and the number of depositors will go to DICGC. Within the next 45 days, the agency is authorized to process claims and pay each eligible account holder. In the past, only when the bank entered the liquidation stage, the depositor could get the insurance amount covered under DICGC. Depositors have to wait endlessly for the Reserve Bank of India to decide whether the bank should liquidate. It covers nearly 98.3% of all deposit accounts, and in terms of deposit value, it will cover 50.9%. The coverage of deposit insurance accounts for only 80% of all deposit accounts in the world, and only 20% to 30% of the value of depositors is considered. The finance minister also reported that the deposit premium paid by the bank for DICGC insurance will increase from 10 paisa to 12 paisa per deposit of 100 rupees which is slightly higher premium paid by the banks and this burden is not been passed to account holders. This means that insurance coverage has been increased from Rs 100,000 to Rs 500,000, a five-fold increase, but the insurance premium paid by the bank has only increased by 20%. Since March 2020, the Reserve Bank of India has placed PMC Bank, Yes Bank Ltd. and Lakshmi Vilas Bank on suspension, prohibiting depositors from withdrawing their deposits immediately to avoid a run. Yes Bank was eventually rescued by a loan consortium led by the State Bank of India, and DBS Bank India took over Lakshmi Vilas Bank and it covers all commercial banks, whether public or private sector banks, are protected by this law, as well as foreign banks operating in India and DICGC act aimed at to minimise troubles faced by depositors of stressed banks. According to the DICGC guidelines, if you have deposits in multiple banks, the deposit insurance limit of Rs 500,000 applies to deposits in each bank. Therefore, deposit your savings in a different bank to take advantage of the benefits of deposit insurance to increase the safety net with the deposit insurance benefit. This Amendment Bill will help especially small depositors meet urgent financial agencies. Thank you.
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