DICGC to pay depositors of 17 cooperative banks

22 Aug 2022 , 08:52 AM

In October, reimbursements would be made to qualified depositors of 17 cooperative banks, including eight from Maharashtra, by the Deposit Insurance and Credit Guarantee Corporation (DICGC). In July, the RBI placed severe limitations on deposits from these 17 banks due to their poor financial situations, including a prohibition on withdrawals.

The RBI's wholly-owned subsidiary DICGC offers bank deposit insurance coverage up to Rs5 lakh

Eight cooperative banks are located in Maharashtra, four in Uttar Pradesh, two in Karnataka, one in New Delhi, one in Andhra Pradesh, and one in West Bengal, out of the 17 cooperative banks.

According to the DICGC, eligible depositors must provide alternate bank account information into which the aforementioned amount will be credited in addition to a valid identity document or documents, written authorization to receive the amount in their deposit accounts up to a maximum of Rs5 lakh, and proof of eligibility.

According to the statement, depositors will either be compensated by credit to an alternative bank account they have designated or, with their permission, to a bank account linked to their Aadhaar.

All commercial banks in all states and UTs are covered by the DICGC's deposit insurance program, including local community banks, regional rural banks, and cooperative banks.

With the aim of preserving small depositors' faith in the nation's banking system and fostering financial stability, the company has been providing insurance coverage to depositors.

The landscape of deposit insurance in India underwent significant changes as a result of the Deposit Insurance and Credit Guarantee Corporation (Amendment) Act, which was approved by Parliament in 2021.

The Corporation is responsible for paying depositors of an insured bank the insured deposit amount. When an insured bank goes through liquidation, reconstruction, or other arrangements under a scheme, as well as a merger or acquisition by another bank, such responsibility may become an issue.