The government may introduce a bill to amend the law during the monsoon session of parliament, which will return the amount of money the bank has in case of a bank crisis. The purpose is to ensure that the money is returned to banks easily and on time under the Bank Deposit Insurance Scheme. Such measures were often considered after the sinking of the Punjab and Maharashtra Cooperative Bank (PMC) and the crisis of some other banks.
The government has increased the security guarantee on deposits in the bank from Rs 1 lakh to Rs 5 lakh last year. To make the system more comfortable and smooth, Finance Minister Nirmala Sitharaman has proposed to amend the Deposit Insurance and Loan Guarantee Corporation (DIGC) Act, 1961 in the Budget Speech. According to sources, the draft of the bill has almost been corrected. It can be tabled at the forthcoming Parliamentary Monsoon Session after Cabinet approval. The amended law provides more relief for thousands of people who are stuck in crumbling or rotting banks like the PMC.
What is DIGC?
Deposit Insurance and Credit Guarantee Corporation (DIGC) provides insurance on bank deposits. It is a wholly owned subsidiary of Reserve Bank of India (RBI). DIGCC includes all types of bank deposits. These include savings account, fixed deposit (FD), current and recurring deposit. The limit is up to Rs 5 lakh. This means that a deposit of Rs 5 lakh to the customer is safe.
There was a guarantee for only 30 thousand
Until May 1993, when the bank sank, the depositor had to pay a sum of Rs 30,000 on the amount deposited in his account. It was replaced in 1992 due to a security scandal. After the Bank of Karad went bankrupt, the limit on insured deposits was raised to Rs 1 lakh. It was later increased to Rs 5 lakh in the FY budget of 2021.
