Breather for bank depositors

The Union Cabinet on Wednesday approved the Deposit Insurance and Credit Guarantee Corporation Bill-2021 that proposes to provide relief to small depositors by providing guarantees on their life savings. According to Union Finance Minister Nirmala Sitharaman, the Bill will increase insurance amount on each depositor's bank deposit to Rs 5 lakh in both principal and interest.

The increase in insured amount from Rs 1 lakh to Rs 5 lakh will cover 98.3 per cent of all deposit accounts and 50.9 per cent of deposit value. "This is higher than what cover is provided internationally, that is about 80 per cent of deposit accounts and 20-30 per cent of deposit value," she said.

"We have approved the 'Deposit Insurance Credit Guarantee Corporation', which was created in case people faced difficulties after @RBI imposes moratoriums on banks," Finance Minister said.

The amount guaranteed under the Act will be available to depositors of all banks and financial institutions including those sectors where the bank has gone into moratorium.