The Union Cabinet cleared the Deposit Insurance and Credit Guarantee Corporation (DICGC) Bill and Limited Liability Partnership Amendment Bill on July 28.
Under the amendments made to the Deposit Insurance Credit Guarantee Corporation (DICGC) Act 1961, account holders will get up to Rs 5 lakh within 90 days of the bank’s collapse. The move will provide relief to depositors of troubled banks.
After the Union Cabinet cleared DICGC Bill 2021, Finance Minister Nirmala Sitharaman held a press briefing in which she said, “each depositor's bank deposit is insured up to Rs 5 lakh in each bank for both principal and interest.”
She added that the increase of the insured amount from Rs 1 lakh to Rs 5 lakh will cover 98.3 percent of all deposit accounts and 50.9 percent of the deposit value.
Sitharaman explained that even if there is a moratorium on the bank the measure will be set in. The first 45 days will go for the banks in distress to hand over to the insurance corporation and within 90 days the process will be definitely completed without waiting for the resolution, she said.
"Normally, it takes 8 - 10 years after complete liquidation to get money under insurance; but now, even if there is a moratorium, within 90 days, the process will definitely be completed, giving relief to depositors," the Union Minister said.
The insurance premium should not be more than 15 paise per Rs 100 and the changes wanted by banks will have to be taken up in consultation with the Reserve Bank of India (RBI), she added.
Asserting that this will be a relief for all banks coming under the moratorium, she said the DICGC Bill will be taken to Parliament.
The Cabinet has also cleared the amendment to Limited Liability Partnership Amendment Bill. This is the first time since 2008, when the LLP Act was enacted, that amendments have been proposed.
A total of 12 offences are to be decriminalised for LLPs and three sections will be omitted, Sitharaman said. Explaining the rationale for LLP Amendment Bill, said the amendments will bring to LLPs an equal playing field, compared to large companies which come under the Companies Act.
The Union Minister added that many startups can also benefit from the ease of doing business and that the government is coming up with a new definition of LLP.