New Delhi: Account holders who have huge amount in their bank account will get only up to Rs 1 lakh insurance cover if the bank, they have deposited, liquidates, the Deposit Insurance and Credit Guarantee Corporation (DICGC) said on Tuesday.
The DICGC which is a subsidiary of the RBI and insures all bank deposits said this in response to an RTI query.
Replying to another query about the raising of Rs 1 lakh insurance limit on bank deposits, the DICGC said that there is no information on this as yet.
“The corporation does not have the requisite information about Rs 1 lakh insurance,” the DICGC said in a statement.
The statement from the RBI subsidiary comes after Union Finance Minister Nirmala Sitharaman on last month said that the Central government is planning to bring a new legislation to raise the insurance cover on bank deposits from the current Rs 1 lakh. She had said that this would happen during the Winter Session of the Parliament which is currently going on.
Her statement came that time after the scam in the Punjab and Maharashtra Cooperative (PMC) Bank had affected lakhs of customers across the country.
The DICGC in a statement again made it clear that the depositors in failed or liquidated banks will get only up to Rs 1 lakh as insurance cover, no matter how much they have in their accounts.
“Under the provisions of Section 16 (1) of the DICGC Act, 1961, if a bank fails/gets liquidated, the DICGC is liable to pay to each depositor through the liquidator, the amount of his deposit up to Rs 1 lakh as insurance cover, for both principal and interest amount held by him in the same right and same capacity at all the branches of a bank taken together,” the DICGC said in a statement.
The DICGC, which covers all commercial banks, including branches of foreign banks functioning in India, further stated that depositors in a bank are insured up to a maximum of Rs 1 lakh on the date of liquidation/cancellation of bank’s license.
“Each depositor in a bank is insured up to a maximum of Rs one lakh as on the date of liquidation/cancellation of bank’s license or the date on which the scheme of amalgamation/merger/reconstruction comes into force,” the DICGC said.
The statement from the DICGC assumes significance as a number of fraud cases are surfacing on a daily basis, putting at risk the life savings of innocent people.
In September this year, the RBI had taken strong action against the PMC Bank after a fraud case of a similar kind was detected in the bank. Taking strict action, the RBI last month imposed operational curbs on the bank.
A number of fraud cases are on the rise in the country in the recent past. Government-owned banks have also reported such fraud cases of over Rs 95,700 crore in the first six months of the current fiscal year.
“According to Reserve Bank of India (RBI), frauds as per year of reporting, as reported by Public Sector Banks (PSBs), during the period from April 1, 2019 to September 30, 2019 is 5,743 involving a total amount of Rs 95,760.49 crore,” Sitharaman had said last month.
(With inputs from PTI)