Bank moratorium | Customers to get Rs 10,000 crore: Report

PMC bank put under direction by RBI.

In a relief to depositors of banks placed under Reserve Bank of India (RBI) moratorium including Punjab and Maharashtra Cooperative (PMC) Bank and Guru Raghavendra Sahakara Bank, nearly Rs 10,000 crores will be paid to eligible customers by the end of November.

“While banks are yet to finalise the eligible account holders, initial estimates suggest the total amount to be around Rs 10,000 crore,” a bank executive aware of the developments told The Economic Times.

The parliament had cleared the Deposit Insurance and Credit Guarantee Corporation (Amendment Bill) enabling depositors of troubled banks to get back amounts below Rs 5 lakh within 90 days, even if a bank is put under moratorium by the Reserve Bank of India (RBI).

As per Finance Minister Sitharaman, the bill increases deposit insurance coverage and reduces the time taken for depositors to recover sums if a bank comes under financial stress.

“There are other banks as well where assessment is being carried out,” the executive told the publication, adding that the amount may increase.

Moneycontrol could not independently verify the report.

RBI placed withdrawal limits on PMC Bank in September 2019, which has been extended till December 31, 2021. Guru Raghavendra Sahakara Bank has also been under restrictions since January 2019. Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the RBI, provides insurance cover on bank deposits.

Though the RBI and the Centre keep monitoring the health of all banks, there have been numerous recent cases of lenders, especially cooperative banks, being unable to fulfil their obligations towards the depositors due to the imposition of a moratorium by the RBI.

In 2020, the government increased the insurance cover on deposits by five times to Rs 5 lakh. The enhanced deposit insurance cover of Rs 5 lakh came into effect from February 4, 2020.

Every bank used to pay 10 paise as an insurance premium per Rs 100 of deposit.