The 90-day period will be divided into two periods of 45 days. “The stressed bank is expected to collate all information regarding the number of claimants and claim amount and inform DICGC about it within the first 45 days. Within the next 45 days, DICGC is mandated to process the claim and make payment to each eligible depositor,” finance minister Nirmala Sitharaman said during a cabinet briefing on July 28, 2021.
The finance minister also stressed on the fact that the deposit insurance coverage apply to banks that will be put under moratorium in future as well as those that are already under moratorium. However, it is yet to be clarified if the amendment will be applicable for PMC Bank.
Even if PMC Bank customers are offered benefits under new amendments, the advantage may be limited. That is because PMC Bank customers’ coverage might be limited to Rs 1 lakh as the bank was put under moratorium much before the deposit covered was raised to Rs 5 lakh. It is yet to be clarified by the finance ministry whether the coverage will be Rs 1 lakh or Rs 5 lakh for the banks which are already under moratorium.
The overall insurance amount of Rs 5 lakh includes both principal and interest held with the bank in the same right and capacity. “This move is expected to cover around 98.3% of total number of accounts and 50.9% of the value of total deposits held with the banks,” said Sitharaman.
Deposits with all banks are covered under DICGC insurance cover of Rs 5 lakh; earlier many cooperative banks were not included in this coverage. However, in 2020 the government introduced an amendment in Banking Regulation Act where RBI was given complete regulatory control over cooperative banks and all banks were put under deposit insurance coverage.
The finance minister also informed that the deposit premium that banks pay for the DICGC coverage will increase from Rs 10 paise to Rs 12 paisa per Rs 100 deposit. This means that the coverage has been raised by 5 times from Rs 1 lakh to Rs 5 lakh but the premium that banks pay has gone up only by 20%.