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In order to ensure timely support to depositors of stressed banks, the government may bring an amendment to the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act in the monsoon session with the objective to provide account holders easy and time-bound access to funds to the extent of the deposit insurance cover.

Last year, the government raised insurance cover on deposit five-folds to Rs 5 lakh with a view to providing support to depositors of ailing lenders like Punjab and Maharashtra Co-operative (PMC) Bank. Following the collapse of PMC Bank, Yes Bank and Lakshmi Vilas Bank too came under stress leading to restructuring by the regulator and the government.

The amendment to the DICGC Act, 1961 is the budget announcement made by the Finance Minister and the Bill is almost ready. It is expected that the Bill will be tabled in the upcoming monsoon session after being vetted by the Union Cabinet. Once the Bill becomes law, it will provide immediate relief to thousands of depositors who had their money parked in stressed lenders such as PMC Bank and other small cooperative banks. As per the current provisions, the deposit insurance of up to Rs 5 lakh comes into play when the licence of a bank is cancelled and the liquidation process starts.