Rajya Sabha Passes Deposit Insurance & Credit Guarantee Corporation (Amendment) Bill

nsurance and Credit Guarantee Corporation (Amendment) Bill amid opposition uproar, with minister of finance Nirmala Sitharaman saying the proposed legislation will help small depositors, including those of the stressed PMC Bank. The bill was passed after a brief debate.

The Bill proposes that albeit a bank is temporarily unable to fulfil its obligations thanks to restrictions like moratorium, depositors can access their deposits to the extent of the deposit insurance cover through interim payments by the Deposit Insurance and Credit Guarantee Corporation (DICGC). For this, the Bill seeks to insert a replacement Section within the DICGC Act, 1961. Replying to a quick debate, Sitharaman said the legislation would offer relief to small bank depositors. She said the proposed legislation also will help depositors of 23 cooperative banks which are under stress.

“PMC Bank depositors also will enjoy this bill,” she said. Thousands of depositors of the fraud-hit multi-state cooperative bank face hardship. The PMC Bank is currently under reconstruction. The bill also seeks to amend Section 15 of the DICGC Act to enable the Corporation to extend the ceiling on the quantity of premium, with the prior approval of the Federal Reserve Bank of India (RBI).

Besides, it’ll also provide that the DICGC may defer or vary the receipt of repayments thanks to it from the insured bank and to empower the Corporation to charge penal interest just in case of delay in repayment by the banks to the Corporation. Though the RBI and therefore the central government keep monitoring the health of all banks, there are numerous recent cases of banks, especially cooperative banks, being unable to fulfil their obligations towards depositors thanks to the imposition of moratorium by the RBI.