That is, every depositor’s deposit up to Rs 5 lakh in any bank is safe. The amount of money is paid to the depositor in the same limit, irrespective of how much money is deposited in the bank, when the bank is insolvent or its license is canceled. Deposit of up to Rs 5 lakh is guaranteed by DICGC. DICGC is a subsidiary owned by the Reserve Bank of India, which provides insurance cover on bank deposits.
Amendment will be done in the current budget session itself
In Budget 2021, Finance Minister Nirmala Sitharaman has announced that a proposal will be brought in the current budget session by amending the DICGC Act 1961, so that the provisions can be streamed. In this case, if a bank temporarily fails to fulfill its obligations, then those depositing in the bank will get their deposits up to Rs 5 lakh easily and on time.
Welcome steps: Expert
Bankbazaar.com CEO Adil Shetty says that the government’s move to streamline deposit insurance claims is welcome. Last year, the government increased the deposit insurance coverage from Rs 1 lakh to Rs 5 lakh in the interest of depositors. But an insurance claim can only be made if the license of the bank is canceled and its liquidation proceedings begin. Now according to the new announcement, bank customers whose accounts have been freed due to bad performance of the bank will also be able to withdraw their money.