This new law will affect the money deposited in customers’ account; know all the things related to it
The Reserve Bank of India (RBI) is regulating all the Government and private banks across the country. Now, it will keep an eye on cooperative banks.
It is worthwhile to mention here that there are 1482 urban cooperative banks and 58 multi-state cooperative banks in India. In total, all 1540 cooperative banks have come under the direct regulation of RBI.
Now what will be the effect on the customers?
Experts say that this decision is in the interest of the customers because if a bank defaults now, the amount deposited in the bank up to Rs 5 lakh is completely safe. Because the finance minister has increased it from Rs 1 lakh to Rs 5 lakh in the budget presented on February 1, 2020. If a bank sinks or goes bankrupt, its depositors will get a maximum of Rs 5 lakh, irrespective of the amount in their account.
According to RBI Subsidiary Deposit Insurance and Credit Guarantee Corporation (DICGC), insurance also means that customers will get Rs 5 lakh, whatever the deposit amount.
Under the provisions of Section 16 (1) of the DICGC Act, 1961, if a bank sinks or goes bankrupt, the DICGC is liable to pay each depositor. There is insurance up to Rs 5 lakh on his deposit.
If you have an account with multiple branches of the same bank, then the amount of money and interest deposited in all the accounts will be added and only deposits up to 5 lakhs will be considered safe. Not only that, if you have more than one account and FD in one bank Also after the bank defaults or sinks, you are guaranteed to get only one lakh rupees. The guidelines of DICGC determine how this amount will be received.
What will be the impact on banks?
Experts say that the biggest benefit from this decision will be that the message will go to the public that their money is safe. The Reserve Bank will ensure for which sector the money of co-operative banks should be allocated. It is also called Priority Sector Lending.
When these banks come under the Reserve Bank, they will also have to follow the RBI rules, which will make it easy to make the country’s monetary policy successful. Also, these banks will also have to keep some of their capital with the RBI. In such a situation, the possibility of their drowning will be reduced. With this decision of the government, public confidence will increase in the cooperative banks of the country and the financial condition of banks in the country will improve.
(The Hindi version of this article was published by hindi.news18.com)