Mumbai: Prime Minister NarendraModi on Sunday said that Rs 1,300 crore had been paid to over one lakh depositors who could not access their money due to financial crises at banks and that a further three lakh such depositors were set to receive payments for funds fund stuck at such banks.
At an event on the theme ‘Depositors First: Guaranteed Time-bound Deposit Insurance Payment up to Rs 5 Lakh’, he said that the move to guarantee deposits of up to Rs 5 lakh up from Rs 1 lakh earlier meant that about 98 per cent of accounts were fully covered and a total Rs 76 lakh crore were insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
“If a bank is weak or is even about to go bankrupt, depositors will get their money of up to Rs 5 lakh within 90 days,” Modi said, noting that earlier account holders “could not access their own money for up to 8-10 years after financial stress at banks”.This August, the Centre passed an amendment to the DICGC Act to ensure that account holders can access their insured deposit amount up to Rs 5 lakh within 90 days of such a liability arising in the event of a bank coming under the moratorium imposed by the Reserve Bank of India (RBI).
Issues faced by depositors in getting immediate access to their funds in recent cases of financial crises at banks such as Punjab & Maharashtra Co-operative (PMC) Bank, Yes Bank and Lakshmi Vilas Bank had put spotlight on the subject of deposit insurance. The Prime Minister said the moves by the government to put “depositors first” were aimed at increasing trust in the banking system.
“Banks play a major role in the nation’s growth and the safety of depositors’ money is similarly necessary for the growth of banks. If we want to save banks, we will have to protect depositors.” Finance Minster Nirmala Sitharaman, at the event, said that unlike other laws, the amendments to the DICGC Act would be applicable retrospectively to ensure that depositors whose money has been stuck due to liquidity issues at banks in the past can also benefit from the reform.