RBI Alert! Certain commercial banks being closed? Central Bank has this to say

RBI Alert! Certain commercial banks being closed? Central Bank has this to say

Deposit Insurance Scheme: The Reserve Bank of India (RBI) has issued directions to the Punjab and Maharashtra Cooperative (PMC) Bank Limited, Mumbai, Maharashtra to not allow depositors withdraw cash above Rs 1,000 for a period of six months from September 23rd, 2019. For the PMC bank, the maximum withdrawal has been capped at Rs 1,000 of the total balance lying in the savings account, current account or a fixed deposit in the bank.

Importantly, RBI in its statement has clarified that the issue of the directions should not be construed as a cancellation of a banking license by the Reserve Bank. “The bank will continue to undertake banking business with restrictions till further notice or instructions. The Reserve Bank may consider modifications of these directions depending upon circumstances,” states RBI in the statement.

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Today on 25th Septemeber, RBI from its Twitter handle has issued a cautionary notice stating, “Reports appearing in some sections of social media about RBI closing down certain commercial banks are false.”

But, the reality is that depositors of the bank are worried about their money. It remains to be seen if the RBI enhances the withdrawal limit in some time. Meanwhile, the talk on the deposit insurance scheme on bank deposits has gained currency.

Here are a few important things about Deposit Insurance and Credit Guarantee Corporation (DICGC) that every bank account holder needs to know:

1. The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a wholly-owned subsidiary of the Reserve Bank of India. In case of a bank failure i.e. liquidation or amalgamation, the DICGC provides protection to bank deposits that are payable in India.

2. All kind of deposits including money in a savings account, current account, recurring deposit, bank fixed deposit etc are covered by DICGC. The premium of deposit insurance is entirely borne by the insured bank.

3. Every bank depositor is insured up to a maximum of Rs 1 lakh including the principal and interest amount. The limit is the aggregate of all bank branches of the same bank but if you have deposits with more than one bank, the deposit insurance limit will apply separately to the deposits in each bank.

4. DICGC provides insurance cover to deposits in all commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks.

5. As far as co-operative banks are concerned, at present, all co-operative banks other than those from the States of Meghalaya, and the Union Territories of Chandigarh, Lakshadweep and Dadra and Nagar Haveli are covered under the deposit insurance system of DICGC.

6. The deposit insurance scheme for the banks is compulsory and no bank can withdraw from it. However, as per the rules, DICGC may cancel the registration of an insured bank if it fails to pay the premium for three consecutive half-year periods. In such a case, DICGC needs to notify this decision to the general public through newspapers.

7. The registration of an insured bank may be cancelled by the RBI under certain specified situations. In the event of the cancellation of registration of a bank, deposits of the bank remain covered by the insurance till the date of the cancellation.

8. As on March 31, 2019, the number of registered insured banks stood at 2,098, comprising 157 commercial banks and 1,941 cooperative banks. With the current limit of deposit insurance in India at Rs 1 lakh, the number of fully protected accounts at end-March 2019 constituted 92 per cent of the total number of accounts, as against the international benchmark of 80 per cent.

9. In terms of amount, the total insured deposits of Rs 33,700 billion as at end-March 2019 constituted 28.1 per cent of assessable deposits of Rs 120,051 billion, as against the international benchmark of 20 to 30 per cent.

10. The size of the Deposit Insurance Fund (DIF) of DICGC stood at Rs 937.5 billion as on March 31, 2019. During 2018-19, the Corporation sanctioned total claims of Rs 0.37 billion as against claims aggregating Rs 0.43 billion during the preceding year. As per the 2018-19 annual report of RBI, four cooperative banks were liquidated during the year, for which the claim list of depositors is yet to be received by RBI.

Source:- yahoo

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