Safety of depositors’ cash very important for development of banks: PM Modi

Prime Minister Narendra Modi on Sunday stated that Rs 1,300 crore had been paid to over one lakh depositors who couldn’t entry their cash on account of monetary crises at banks and {that a} additional three lakh such depositors had been set to obtain funds for funds fund caught at such banks.
At an occasion on the theme ‘Depositors First: Guaranteed Time-bound Deposit Insurance Payment up to Rs 5 Lakh’, he stated that the transfer to ensure deposits of as much as Rs 5 lakh up from Rs 1 lakh earlier meant that about 98 per cent of accounts had been totally lined and a complete Rs 76 lakh crore had been insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
“If a bank is weak or is even about to go bankrupt, depositors will get their money of up to Rs 5 lakh within 90 days,” Modi stated, noting that earlier account holders “could not access their own money for up to 8-10 years after financial stress at banks”.
This August, the Centre handed an modification to the DICGC Act to make sure that account holders can entry their insured deposit quantity as much as Rs 5 lakh inside 90 days of such a legal responsibility arising within the occasion of a financial institution coming below the moratorium imposed by the Reserve Bank of India (RBI).

Issues confronted by depositors in getting rapid entry to their funds in latest instances of economic crises at banks equivalent to Punjab & Maharashtra Co-operative (PMC) Bank, Yes Bank and Lakshmi Vilas Bank had put highlight with regards to deposit insurance coverage. The Prime Minister stated the strikes by the federal government to place “depositors first” had been aimed toward growing belief within the banking system.
“Banks play a major role in the nation’s growth and  the safety of depositors’ money is similarly necessary for the growth of banks. If we want to save banks, we will have to protect depositors.”

Finance Minster Nirmala Sitharaman, on the occasion, stated that in contrast to different legal guidelines, the amendments to the DICGC Act could be relevant retrospectively to make sure that depositors whose cash has been caught on account of liquidity points at banks prior to now also can profit from the reform.
RBI Governor Shaktikanta Das stated the regulator was engaged on bringing about reforms within the cooperative city banking sector which has seen quite a lot of banking collapses leaving depositors unable to withdraw their funds. He, nevertheless, stated depositors should be conscious that increased returns or increased rates of interest are normally related to increased dangers.
“… just because a bank is offering higher interest, depositors should be very careful before putting in money while chasing such high returns because usually, our experience is that high returns or high interest rates are associated with higher risks,” he stated.