40,000 depositors of stressed Bengaluru bank to benefit from DICGC bill: Surya
Bengaluru South MP thanks FM Sitharaman for passing bill to provide Rs 5 lakh deposit insurance within 90 days to account holders of troubled banks
NEW DELHI/BENGALURU:
Bengaluru South Member of Parliament Tejasvi Surya has thanked Finance Minister Nirmala Sitharaman for the passage of the Deposit Insurance Credit Guarantee Corporation bill 2021 in the Lok Sabha on Monday. He said this will provide relief to depositors of the stressed Sri Guru Raghavendra Cooperative Bank in Bengaluru South.
The bill mandates the DICGC to provide a deposit insurance of up to Rs 5 lakh to account holders in banks placed under moratorium within a period of 90 days. Earlier, depositors had to wait for 8-10 years for receiving their deposit insurance given at the time of liquidation, reconstruction or merger.
Surya expressed gratitude to Sitharaman for coming to the assistance of more than 40,000 depositors of Guru Raghavendra Bank. “The passage of the bill is an example of how PM Narendra Modi’s government puts the interests of the common citizen first,” Surya said.
“In all, there are 41,804 depositors in Guru Raghavendra Bank and around 31,576 account holders have deposits up to Rs 5 lakh. The DICGC bill will provide the maximum relief to these 75.53% of depositors of Guru Raghavendra Bank to the tune of Rs 261 crore within 90 days of the notification. The remaining 10,000-odd account holders, who have invested more than Rs 5 lakh, will be covered to the tune of Rs 511 crore,” Surya added.
With the passage of the DICGC Bill, 75.53% depositors of Sri Guru Raghavendra Bank will get entire deposits back very soon.
— Tejasvi Surya (@Tejasvi_Surya) August 9, 2021
I thank PM Sri @narendramodi Ji and FM Smt. @nsitharaman Ji for protecting the interests of small depositors, senior citizens, and the middle class. pic.twitter.com/Djqc09OZvl
Guru Raghavendra Bank scam
The RBI imposed regulatory restrictions on Guru Raghavendra Bank on January 10, 2020 under Section 35A of the Banking Regulation Act due to large scale irregularities in the bank. It was found that only 27 borrowers have borrowed upwards of Rs 927 crore and have contributed to more than 70% of the total NPAs. The erstwhile management of the Sri Guru Raghavendra Bank also presented false P/L statements when they were suffering real losses.
While an administrator is currently working out a revival plan for the bank, the amendment bill will bring immediate relief to the depositors.
“Last year, the Narendra Modi government increased the insured amount for bank account holders from Rs 1 lakh to Rs 5 lakh,” Surya said. “In the winter session of 2020, the government also passed another historic amendment to the Banking Regulation Act, bringing all banks under the ambit of the RBI with respect to banking functions. The reforms put an end to the conflict of interest of promoters of banks and paved the way for more professionalism and progressive banking practices in cooperative banks. Even during the budget session, the FM had declared that she would bring a bill to provide relief to all depositors of stressed banks and today, she has managed to successfully pass the bill in both the Houses.”
The deposit insurance cover will benefit around 98.3 per cent of all account holders. The total quantum of relief will also make up around 50.9% of the deposit value in distressed banks. The bill will also be applicable to the 9,15,775 account holders in PMC Bank.
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