New Delhi: Deposit Insurance and Credit Guarantee Corporation (DICGC) has reportedly decided to pay the account holders of the insured ailing banks including PMC up to Rs 5 lakh within 90 days, as part of its mandate under a new law. The operations of these banks have been shut. Meanwhile, the Reserve Bank of India’s subsidiary DICGC has asked 21 stressed cooperative banks to prepare list of account holders.
To note, last month, Parliament passed the DICGC (Amendment) Bill, 2021 ensuring that account holders get up to ₹5 lakh within 90 days of the RBI imposing a moratorium on banks.
There are 21 such cooperative banks that are under the RBI’s moratorium. So, account holders of these lenders are covered under the law passed last month.
Out of 21 banks, 11 are from Maharashtra, while five are from Karnataka. One each from Uttar Pradesh, Madhya Pradesh, Punjab, Kerala, and Rajasthan. Besides PMC Bank, depositors of Sri Guru Raghavendra Sahakara Bank, Rupee Cooperative Bank, Independence Cooperative Bank, Adoor Co-Operative Urban Bank, Bidar Mahila Urban Co-Op. Bank Ltd and Peoples Cooperative Bank will also benefit.
DICGC has also asked the banks to circulate a consent form to the depositors for accessing funds up to ₹5 lakh as per the amended law within 90 days. The monetary body also asked the depositors to reach out to their respective banks and submit their declaration of willingness and update any pending documents before October 15 for their names to be included in the list.
The Corporation will then make the payment of the difference in the amount of deposits up to the eligible amount of ₹5 lakh before 29 December, as per the final updated list submitted by the banks.
In September 2019, RBI superseded the board of PMC Bank and imposed various regulatory restrictions after financial irregularities came to light. Restrictions were imposed on Sri Guru Raghavendra Sahakara Bank in January last year.
Last year, the government increased the insurance cover on deposits by five times to ₹5 lakh. The enhanced deposit insurance cover of ₹5 lakh came into effect from February 4, 2020. The increase was done after a gap of 27 years as it has been static since 1993