Modi says bank deposit insurance guarantee raised to Rs 5 lakh to address concerns of poor, middle class
New Delhi, December 12, 2021
Prime Minister Narendra Modi today said the Government, understanding the concern of the poor and the middle class, has increased the guaranteed amount in bank deposit insurance to Rs 5 lakh.
“Earlier there was no time limit for refund, now our government has made it mandatory to refund within 90 days,” the Prime Minister said, addressing a function titled Depositors First: Guaranteed Time-bound Deposit Insurance Payment up to Rs. 5 Lakh.
“Banks play a major role in the prosperity of the country. And for the prosperity of the banks, it is equally important for the depositors' money to be safe. If we want to save the bank, then depositors have to be protected,” he added.
In the last few days, more than one lakh depositors have got their money back that was stuck for years. This amount is more than Rs 1,300 crore, Modi said.
Any country could save the problems from getting worse by timely resolution of the issues. However, for years there was a tendency to avoid problems. Today's new India strives for solving problems, it does not avoid problems, he said.
He noted that the system of insurance for bank depositors was set up in the 1960s. Earlier, out of the amount deposited in the bank, only the amount up to Rs 50,000 was guaranteed. Then it was raised to Rs one lakh. If the bank sank, then the depositors had a provision to get only up to Rs one lakh. There was no time limit on when this money would be paid.
By amending the law, this government has made it mandatory to disburse the money within 90 days. Even in the event of a bank sinking, the depositors will get their money back within the specified period, he said.
The Prime Minister noted that over the years, by merging many small public sector banks with large banks, their capacity, capability and transparency have been strengthened in every way. When RBI monitors cooperative banks, it increases the confidence of the common depositor in them.
The problem was not only about the bank account but also the delivery of banking services to the remotest villages. Today, in almost every village of the country, the facility of a bank branch or a banking correspondent has reached within a radius of 5 km. The common citizen of India can do even the smallest transactions digitally anytime, anywhere, 24 hours a day.
Many such reforms have helped India's banking system run smoothly even in the biggest calamity in 100 years. “When even the developed countries of the world were struggling to provide help to their citizens, India provided direct help to almost every section of the country at a fast pace,” he added.
The Prime Minister said measures taken in the last few years have taken the facilities like insurance, bank loans and financial empowerment to a largely underserved segment of the poor, women, street vendors and small farmers. Earlier, banking had not reached women in any significant way. As a result of this issue taken up as a priority by the government, of the crores of bank accounts opened under Jan Dhan Yojana, more than half belong to women. “The effect these bank accounts have on the economic empowerment of women, we have also seen in the recent National Family Health Survey,” he added.
Deposit insurance covers all deposits such as savings, fixed, current, recurring deposits, etc. in all commercial banks functioning in India. Deposits in State, Central and Primary cooperative banks, functioning in States/Union Territories are also covered.
With deposit insurance coverage of Rs. 5 lakh per depositor per bank, the number of fully protected accounts at end of the previous financial year constituted 98.1% of the total number of accounts, as against the international benchmark of 80%.
The first tranche of interim payments has been released by the Deposit Insurance and Credit Guarantee Corporation recently, against claims received from depositors of 16 Urban Cooperative Banks which are under restrictions by RBI. Payout of over Rs 1,300 crore has been made to alternate bank accounts of over 1 lakh depositors against their claims.