Budget relief: Depositors of stressed banks can access up to Rs 5 lakh of deposits – The Economic Times

Clipped from: https://economictimes.indiatimes.com/industry/banking/finance/banking/budget-relief-depositors-of-stressed-banks-can-access-up-to-rs-5-lakh-of-deposits/articleshow/80629131.cmsSynopsis

The finance minister said that the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961 would be amended to create such a provision. The government raised the deposit insurance cover to Rs 5 lakh from Rs 1 lakh last year.

KOLKATA: Depositors in ailing banks will be able to access up to Rs 5 lakh of their deposits even if the bank is placed under moratorium, finance minister Nirmala Sitharaman said.

This will provide immediate relief to thousands of depositors who had their money parked in Punjab and Maharashtra Co-operative (PMC), once the Budget is passed.

The finance minister said that the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961 would be amended to create such a provision.

The government raised the deposit insurance cover to Rs 5 lakh from Rs 1 lakh last year.

“I shall be moving amendments to the DICGC Act, 1961 in this session itself to streamline the provisions, so that if a bank is temporarily unable to fulfil its obligations, the depositors of such a bank can get easy and time-bound access to their deposits to the extent of the deposit insurance cover,” Sitharaman said in her Budget speech.

“This would help depositors of banks that are currently under stress,” she added. Besides the PMC Bank, YES Bank and Lakshmi Vilas Bank were also put under moratorium in recent times putting their depositors on temporary stress.

The Reserve Bank of India extended business restrictions on the PMC Bank by three months till 31 March, 2021, aggravating the pain of its customers.

The bank had total deposits of Rs 10,727 crore as on March 31, 2020.

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bank deposit insuranceNirmala SitharamanIndia budgetbudget 2021budget(Catch all the Business NewsBreaking News Events and Latest News Updates on The Economic Times.)

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