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New legislation to bring relief to PMC bank account holders
Union finance minister Nirmala Sitharaman said the legislation would bring relief to depositors of the Punjab and Maharashtra Cooperative Bank and 23 other cooperative banks which are under stress.
The Rajya Sabha passed the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill on Wednesday in a bid to bring relief to depositors whose banks are unable to fulfil their obligations due to restrictions such as moratorium etc. Depositors will be able to access their money to the extent of the deposit insurance cover through interim payments by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Union finance minister Nirmala Sitharaman said the legislation would bring relief to depositors of the Punjab and Maharashtra Cooperative Bank and 23 other cooperative banks which are under stress.
“PMC Bank depositors will also benefit from this bill,” Sitharaman said during the passage of the bill. The RBI imposed restrictions on the multi-state cooperative bank in September 2019 after it found financial irregularities. It curbed all activities of the bank and imposed restrictions including a cap on withdrawal of money from customers’ accounts. The Reserve Bank of India (RBI) extended restrictions on withdrawals and deposits till June 30, 2021.
The bill was passed after a short debate in the Upper House.
The bill aims to amend Section 15 of the Deposit Insurance and Credit Guarantee Corporation (DICGC) by inserting a new section. The proposed amendment will allow the Corporation to increase the ceiling on the amount of premium, with the prior approval of the RBI. The legislation will allow DICGC to defer or vary the receipt of repayments due to it from the insured bank and will allow the Corporation to levy penal interest in case of any delay in repayment by the banks to the Corporation.
The Union Cabinet last week cleared several amendments to the DICGC Act. It set a 90-day time limit to provide up to ₹5 lakh to each account holder of a bank if it freezes. It also made the Limited Liability Partnership (LLP) Act more business-friendly by decriminalising its various provisions and expanded the definition of small LLPs, according to a report by HT.
