Attempting to cheer those who have lost their money due to failure of banks or financial institutions, Prime Minister Narendra Modi Sunday assured that about three lakh account holders will soon get their deposits with the banks that are under the RBI moratorium.
He said over 1 lakh depositors have got about Rs 1,300 crore of their money with stressed banks in the past few days with the enactment of the legislation.
Modi was speaking at an event on the safety of depositors' money in the bank – “Depositors First: Guaranteed Time-bound Deposit Insurance Payment up to Rs 5 Lakh”.
Modi said earlier, out of the amount deposited in the bank, only up to Rs 50,000 was guaranteed. Then it was raised to Rs 1 lakh… but there was no time limit on when this money would be paid.
“Understanding the concern of the poor, understanding the concern of the middle class, we increased this amount to Rs 5 lakh. Another problem was tackled by amending the law. Earlier where there was no time limit for refund, now our government has made it mandatory within 90 days. That is, even in the event of a bank sinking, the depositors will get their money back within 90 days”, he said.
Parliament earlier this year passed the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021, ensuring that account holders get up to Rs 5 lakh within 90 days of the RBI imposing a moratorium on the banks.
The enhanced deposit insurance cover of Rs 5 lakh came into effect from April, 2020. Before this, the increase was done in 1993, after a gap of 27 years. The deposit cover was then increased to Rs 1 lakh from Rs 30,000 in 1980.
After the deposit insurance cover was raised, the fully protected bank accounts stand at 98.1 per cent of the total number of bank accounts, official data showed.
This is 18 percentage points higher than the international benchmark of 80 per cent. This has been made possible only within one year of the Centre passing deposit insurance bill.
The first tranche of interim payments has been released by the Deposit Insurance and Credit Guarantee Corporation recently, against claims received from depositors of 16 Urban Cooperative Banks which are under restrictions by the RBI.
Payout of over Rs1,300 crore has been made to alternate bank accounts of over 1 lakh depositors against their claims.
Deposit insurance covers all deposits such as savings, fixed, current and recurring deposits in all commercial banks, functioning in India. Deposits in state, central and primary cooperative banks, functioning in states and union territories are also covered. In a path-breaking reform, bank deposit insurance cover was enhanced from Rs 1 lakh to Rs 5 lakh.
Check out latest DH videos here