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JC - Legal Updates - Amendment to DICGC Act

Legal Updates

29 Jul 2021

Amendment to DICGC Act

We have gathered from news reports that The Union Cabinet has approved amendment to the Deposit Insurance and Credit Guarantee Corporation Act, 1961. This amendment will provide account holders access to up to INR 5,00,000 funds within 90 days of a bank coming under moratorium. This increase of the insurance amount from INR 1,00,000 is going to cover 98.3% of all deposit accounts and 50.9% of deposits value.

This would mean that FRDI is completely buried.

We believe that with this there are no immediate plans as regards putting in place a resolution framework for Banks and other Financial Service Providers (FSPs). The Insolvency and Bankruptcy Code, 2016 (IBC) architecture was not meant for FSPs. While subsequently one class of Non-Banking Financial Companies (NBFCs) have been notified under IBC, till date there has been only one instance of IBC being applied to a NBFC even though there have been many others who have defaulted.


For any further information, please contact Mr. Jayesh H (jayesh.h@jclex.com), Mr. Ankit Sinha (ankit.sinha@jclex.com), Mr. Saurabh Sharma (saurabh.sharma@jclex.com) or Ms. Smrithi Nair (smrithi.nair@jclex.com).