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August 12, 2021

6 features of new DICGC Bill

by CA Shivam Jaiswal in Corporate Law, Income Tax

6 features of new DICGC Bill

DICGC stands for Deposit Insurance and Credit Guarantee Corporation. The functions of the DICGC are governed by the provisions of The Deposit Insurance and Credit Guarantee Corporation Act, 1961 (DICGC Act) and The Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961 framed by the RBI in exercise of the powers conferred by Section 50(3) of the said Act.

Government had approved an increase in the Deposit Insurance cover from `1 lakh to `5 lakhs for bank customers. It shall be moving amendments to the DICGC Act, 1961 in this Session itself to streamline the provisions, so that if a bank is temporarily unable to fulfil its obligations, the depositors of such a bank can get easy and time-bound access to their deposits to the extent of the deposit insurance cover. This would help depositors of banks that are currently under stress.

After the passage of this bill, the deposit insurance coverage in India has gone up to 98.3% and covered deposit value has increased to 50.9%, while the corresponding figures globally are only 80% and 20% – 30%

6 features of new DICGC Bill

1. Interim payment to be made by DICGC to depositors in those banks for whom any restrictions/ moratorium have been imposed by RBI under the BR Act

2. Depositors will be able to access their own money (ordinarily payable on demand) without waiting for years till liquidation, etc.

3. Clear-cut timeline of maximum of 90 days provided for interim payment t depositors

4. Provision to cover existing cases where banks are already under restrictions.

5. Enables  timely repayment to DICGC and expedites recoveries

6. Enables ceiling on premium to be notified by DICGC, with the prior approval of RBI

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