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The Deposit Insurance and Credit Guarantee Corporation (DICGC) Bill and the Limited Liability Partnership Amendment Bill were approved by the Union Cabinet on July 28.

Account-holders will receive up to Rs 5 lakh within 90 days after the bank's failure, thanks to revisions to the Deposit Insurance Credit Guarantee Corporation (DICGC) Act 1961. Depositors in struggling banks will benefit from the action.

“Each depositor's bank deposit is insured up to Rs 5 lakh in each bank for both principal and interest.” Finance Minister Nirmala Sitharaman said after the Union Cabinet approved the DICGC Bill 2021.

She went on to say that raising the insured sum from Rs 1 lakh to Rs 5 lakh will cover 98.3% of all bank accounts and 50.9 per cent of the deposit value.

Even if the bank is put on hold, Sitharaman indicated, the action will be implemented. The first 45 days will be used to transfer distressed banks to the insurance organisation, and the process will be finished without waiting for a resolution within 90 days, she said.

According to the Union Minister "Normally, it takes 8 - 10 years after complete liquidation to get money under insurance; but now, even if there is a moratorium, within 90 days, the process will definitely be completed, giving relief to depositors,"

She went on to say that the insurance premium should not be more than 15 paise per Rs 100 and that any adjustments requested by banks should be done in collaboration with the Reserve Bank of India (RBI).

She stated that the DICGC Bill will be presented to Parliament, stating that this will be a relief for all banks affected by the moratorium.

The change to the Limited Liability Partnership Amendment Bill has also been approved by the Cabinet. This is the first time revisions have been proposed since the LLP Act was implemented in 2008.

For LLPs, a total of 12 offences will be decriminalised, and three sections will be removed, according to Sitharaman. The revisions, according to the justification for the LLP Amendment Bill, will provide LLPs with an equal playing field with large corporations that fall under the Companies Act.

Many entrepreneurs can profit from the ease of doing business, according to the Union Minister, and the government is working on a new definition of LLP.

(Source: CNBC TV 18)