Why DICGC Act amendment is big news for small depositors
The Indian banking system now has a much better safety net for depositors of failing banks compared to what they had till a year ago. February 04, 2021 / 07:29 AM IST
The collapse of UCBs like Punjab and Maharashtra Cooperative Bank (PMC Bank) has added to the customers’ distrust.
In the 2021 Union Budget, Union Finance Minister Nirmala Sitharaman proposed to amend the Deposit Insurance and Credit Guarantee Corporation Act (DICGC). This is aimed at enabling depositors of troubled banks to access their money through DICGC route even if banks are temporarily unable to meet the obligations. This announcement assumes significance, particularly for smaller depositors. Earlier, DICGC could be invoked only on liquidation of banks.
The government also decided to set up asset reconstruction company and an asset management company to manage bad debt for scheduled banks, which are expected to reach record levels this year.
Finance Minister Nirmala Sitharaman's third budget in two years was one that registered unprecedented fiscal deficit, an intent that is definitely encouraging for an economy that has been beaten to the ground by a 'once in a century crisis'.
The only exception is the retired senior citizen who is not claiming deductions like the standard deduction, tax saving investments or house rent allowance
Finance Minister Nirmala Sitharaman in her Budget speech announced that depositors will have an easy and time-bound access to deposits if a bank gets liquidated