Depositors to get upto Rs 5 lakhs within 90 days if banks fail, Cabinet clears required amendment

New Delhi, July 28 (FN Agency) In a major relief to small depositors, the Union Cabinet on Wednesday approved amendments to the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act to ensure account holders get back deposits upto Rs 5 lakh within 90 days in case a distressed bank is put under moratorium by Reserve Bank of India (RBI). Announcing the decision, Information and Broadcasting Minister Anurag Thakur said,”Today’s Cabinet meeting has decided that within 90 days, depositors will receive Rs 5 lakhs of their money.”

The proposed amendment will cover all bank deposits such as saving, fixed, current or recurring deposits. It will also cover all commercial banks — private or public or even foreign banks with branches in India. Talking about the decision in detail, Finance Minister Nirmala Sitharaman said that with the increase of insured amount from Rs 1 lakh to Rs 5 lakh, it will cover 98.3 per cent of all deposit accounts. In terms of deposit value, 50.9 per cent deposits will be covered. In another major decision, the Cabinet chaired by Prime Minister Narendra Modi cleared amendment in Limited Liability Partnership (LLP) Act to remove criminal provisions. The move will reduce compliance burden and improve ease of doing business (EoDB).

Briefing the media on Cabinet decisions, the I&B Minister said that a lot of changes are being made in Companies Act, decriminalising many sections and improving Ease or Doing Business for companies. A similar treatment had to be given for LLPs, said Thakur. The Cabinet also approved Multilateral MoU signed between international financial service centres and multilateral agencies, International Organisation of Security Commissions and International Association of Insurance Supervisors. The Union Cabinet also approved a proposal to create 2 posts of Judicial Members and 2 posts of Administrative Members for benches of Central Administrative Tribunal at Jammu and Srinagar.