The Reserve Bank of India's subsidiary DICGC has asked nearly two dozen stressed cooperative banks including PMC Bank to prepare a list of account holders eligible to receive Rs 5 lakh within 90 days, as part of its mandate under a new law.
Last month, Parliament passed the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021 ensuring that account holders get up to Rs 5 lakh within 90 days of the RBI imposing a moratorium on banks.
Following enactment, the government has notified September 1, 2021 as the date on which the provisions of the Act would come into force. The mandated 90 days from the notified date comes to an end on November 30, 2021.
There are 21 such cooperative banks which are under the RBI's moratorium. So, account holders of these lenders are covered under the law passed last month.
"These (21) banks shall submit a claim list by October 15, 2021 and update the position as on November 29, 2021 (with principal and interest), in a final updated (second) list, to enable DICGC settle the claim and discharge its insurance liability in full as per norms," Deposit Insurance and Credit Guarantee Corporation (DICGC) said in a statement.
DICGC has also asked the banks to circulate consent form to account holders for accessing funds up to Rs 5 lakh as per the amended law within 90 days.
"Unpaid (updated willingness list)/difference in amount of deposits up to eligible amount (as per final updated list submitted by November 29, 2021) will be paid within 30 days of receipt (i.e., by December 29, 2021)," it said.
Besides PMC Bank, depositors of Sri Guru Raghavendra Sahakara Bank, Rupee Cooperative Bank, Independence Cooperative Bank, Adoor Co-Operative Urban Bank, Bidar Mahila Urban Co-Op. Bank Ltd and Peoples Cooperative Bank will also benefit.
Out of 21 banks, 11 are from Maharashtra, while five from Karnataka. One each from Uttar Pradesh, Madhya Pradesh, Punjab, Kerala, and Rajasthan.
In September 2019, RBI superseded the board of PMC Bank and imposed various regulatory restrictions after financial irregularities came to light while restrictions were imposed on Sri Guru Raghavendra Sahakara Bank in January last year.
Last year, the government increased the insurance cover on deposits by five times to Rs 5 lakh. The enhanced deposit insurance cover of Rs 5 lakh came into effect from February 4, 2020.
Every bank used to pay 10 paise as an insurance premium per Rs 100 of deposit. It was raised to 12 paise per Rs 100 in 2020. It cannot be more than 15 paise at any point in time per Rs 100 deposit.
It is to be noted that the enhanced deposit insurance cover of Rs 5 lakh is effective from February 4, 2020. The increase was done after a gap of 27 years as it has been static since 1993.