The Government on 28 July took a big decision for bank account holders. The Union Cabinet has approved the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021.
The Bill provides account holders security of their money by allowing access to up to Rs 5 lakh within 90 days of a bank coming under a moratorium.
It was introduced in Parliament’s monsoon session held under the chairmanship of Prime Minister Modi.
Union Minister Anurag Thakur said that Deposit Insurance Credit Guarantee Corporation (DICGC) was formed because bank depositors faced problems while withdrawing their money from banks if RBI imposed a moratorium. Last year, the Finance Minister had increased its limit from 1 lakh to 5 lakh, and on 28 July, it has been decided that within 90 days, up to Rs 5 lakh will be paid to the depositors.
What is the Deposit Insurance Credit Guarantee Corporation of DICGC?
DICGC is a wholly-owned subsidiary of the Reserve Bank of India (RBI). It provides deposit insurance that works as a protection cover for bank deposit holders when the bank fails to pay its depositors.
How does DICGC work?
It protects depositors’ money kept in all commercial and foreign banks located in India; central, state, and urban co-operative banks; regional rural banks; and local banks, provided that the bank has opted for DICGC cover.
The agency’s operations are performed as per the Deposit Insurance and Credit Guarantee Corporation Act, 1961 and The Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961.
While announcing the amendments of the Bill to the media, Finance Minister Nirmala Sitharaman said that “Under the latest amendment in the DICGC Bill, 98.3% of all deposits will be covered and in terms of deposit value, 50.9% of deposits will be covered. While the Global deposit value is only 80% of all deposit accounts and covers only 20-30% of the deposit value.”
Limited Liability Partnership (Amendment) Bill 2021
Apart from this, the cabinet has also approved the Limited Liability Partnership (Amendment) Bill 2021. This bill will remove the troubles caused by small mistakes in the business so that honest businessmen do not have to face unnecessary trouble.
Commenting on expanding the scope of small LLPs, Finance Minister Nirmala Sitharaman said that, “LLPs with contributions of less than or equal to Rs 25 lakhs and LLPs with turnover less than Rs 40 lakhs are considered as small LLPs. Now, the range will be from Rs 25 lakh to Rs 5 crore. While the size of the business will be considered to be Rs 50 crore.”
The amendments of LLP Bill 2021 will provide “ease of doing business” for the startups that prefer the LLP model.