Union Finance Ministry: Amendments to the DICGC Act Will Apply to PMC Bank Customers

Union Finance Ministry: Amendments to the DICGC Act Will Apply to PMC Bank Customers

The Union Finance Ministry said that new amendments to the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act will soon cover customers of the Punjab and Maharashtra Co-operative (PMC) Bank. 

“The cause of continuing concern is that when various restrictions, including moratorium, are imposed on a bank by the Reserve Bank of India, genuine depositors continue to face serious difficulties in accessing their deposits, despite deposit insurance being in place, and this may continue for extended periods of time,” Finance Minister, Nirmala Sitharaman said.

ReadRBI Places Multiple Riders On Centrum Prior To Proposed Takeover Of PMC Bank

PMC Bank’s operations have been restricted by the RBI since September 2019. In July 2021, RBI announced an extension of restrictions on PMC until December 2021. The withdrawal limit is currently capped at ₹1 lakh.

The law states that deposits up to ₹5 lakhs shall be paid within 90 days of a bank moratorium. In order to benefit PMC Bank customers, the government has added a new section which states that payment to the lenders will also apply wherein the suspension of a business is already underway. 

The new amendment recommends offering the DICGC an additional 90 days to pay off the depositors. This is in case the RBI has suggested a restructuring or amalgamation scheme for a failed bank. 

“In cases where the Reserve Bank finds it expedient in the interest of finalising a scheme of amalgamation of the insured bank with other banking institution or a scheme of compromise or arrangement or of reconstruction in respect of such insured bank and communicates to the Corporation accordingly, the date on which the Corporation shall become liable to pay every depositor of such insured bank may further be extended by a period not exceeding ninety days,” the amendment reads.

The Central Government is hopeful of passing the amended DICGC Bill during the current monsoon session.  

Also readPMC Bank Depositors Will Move Bombay HC Looking For An Early Return Of Deposits

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