Prime Minister Shri Narendra Modi addressed a function on “Depositors First: Guaranteed Time-bound Deposit Insurance Payment up to Rs. 5 Lakh” in New Delhi on December 12.
- Prime Minister said that Rs 1,300 crore had been paid to over 1 lakh depositors who could not access their money as their banks faced financial crises and that a further 3 lakh such depositors were set to receive funds stuck in such accounts.
- The Government of India had in August 2021 passed an amendment to the Deposit Insurance and Credit Guarantee Corporation Act to ensure that account holders can access their insured deposit amount 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).
- In an event of a bank failing in India, a depositor has a claim to a maximum of Rs 5 lakh per account as insurance cover.
- The cover of Rs 5 lakh per depositor is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC), which is a fully owned subsidiary of the Reserve Bank of India.
- Within the first 45 days of the bank being put under moratorium, the DICGC would collect all information relating to deposit accounts. In the next 45 days, it will review the information and repay depositors closer to the 90th day.
- Deposit insurance covers all deposits such as savings, fixed, current, recurring deposits, etc. in all commercial banks, functioning in India. Deposits in State, Central and Primary cooperative banks, functioning in States/Union Territories are also covered. In a path breaking reform, Bank deposit insurance cover was enhanced from Rs. 1 lakh to Rs. 5 lakh.
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