Depositors of 16 failed cooperative banks will receive their deposit insurance coverage – up to ₹5 lakh – by the Reserve Bank of India’s subsidiary DICGC on Monday as part of its mandate under a new law.
The Deposit Insurance and Credit Guarantee Corporation (DICGC) had originally prepared a list of 21 banks, but five, including Punjab & Maharashtra Co-Operative Bank (PMC Bank), were omitted as they are either awaiting merger or out of the moratorium.
Apart from PMC Bank, depositors from Hindu Co-Op Bank Ltd, Pathankot from Punjab, Rupee Co-Operative Bank Ltd and Needs Of Life Co-Operative Bank Ltd from Maharashtra and Bidar Mahila Urban Co-Op Bank Ltd from Karnataka are excluded.
Among the depositors of the 16 banks still on the list, who have not yet submitted their claims, the DICGC advised the DICGC to contact the respective banks.
“Applications must be supported by officially valid identification documents and written consent to receive the credit amount of their deposit account (declaration of will) subject to a maximum of ₹5 lakh along with alternative bank details to which said amount can be credited,” it said in a public notice.
Depositors submitting valid documents, as mentioned above, will be paid by credit to the alternative bank account specified by the depositors or, with their consent, to their bank account linked to Aadhaar, he said.
For the second phase, the deadline for submitting documents is December 10, 2021 while the payment date is December 31, 2021, he added.
The Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill 2021 passed Parliament in August, requiring account holders to stand up to ₹5 lakh within 90 days of the RBI imposing a moratorium on banks.
Following its enactment, the government notified September 1, 2021 as the effective date for the provisions of the law. The term of 90 days from the date notified ends on November 29, 2021.
It is noteworthy that the RBI had in June given its approval in principle to a consortium of Centrum Financial Services and fintech start-up BharatPe to acquire the struggling PMC bank.
Clearing the bridges for the takeover, the RBI in October gave a license for a small corporate bank to the consortium. Recently the DICGC has stated that it may be necessary to invoke the provisions of section 18 A(7)(a) of the Deposit Insurance and Credit Guarantee Corporation (Amendment) Act 2021 .
In accordance with Section 18 A (7) (a) of the Act, if a troubled bank is subject to a resolution process, the disbursement period of ₹5 lakh can be extended for 90 days.
Last year, the government increased deposit insurance coverage fivefold for ₹5,000,000. The enhanced deposit insurance coverage of ₹5 lakh came into effect on February 4, 2020.
Each bank paid 10 paise as insurance premium per ₹100 deposit. It was increased to 12 paise by ₹100 in 2020. It cannot be more than 15 paise at any time per ₹deposit of 100.
It should be noted that the enhanced deposit insurance coverage of ₹5 lakh has been in effect since February 4, 2020. The increase was made after an interval of 27 years as it has been static since 1993.
Download the app to get 14 days of unlimited access to Mint Premium absolutely free!