The Deposit Insurance and Credit Guarantee Corporation(DICGC) (Amendment) Bill, 2021 was introduced to amend the Deposit Insurance and Credit Guarantee Corporation Act, 1961. The Act established the Corporation to provide insurance for bank deposits and guarantee credit given by banks and financial institutions. The Bill seeks to provide depositors time-bound access to their insured deposit amount, in case they are restricted from accessing their bank deposits.
Under the Act, the Corporation is liable to pay the insured deposit amount to depositors of an insured bank. Such liability arises when an insured bank undergoes:
- liquidation, i.e., sale of all assets on closing down of the bank,
- reconstruction or any other arrangement under a scheme, or
- merger or acquisition by another bank, i.e., transferee bank.
Once the Corporation makes the payment to the depositors, the liquidator or the insured or transferee bank (as the case may be) becomes liable to repay the same amount to the Corporation. The amount paid by the Corporation in respect of a deposit reduces its liability against the deposit by that amount.