'The money is readily available to the depositors.'
At present, bank depositors get an insurance cover of Rs 1 lakh on their amount by the Deposit Insurance and credit Guarantee Corporation.
So, the next time someone tempts you with a slightly higher FD rate from a lesser-known bank, point them to hybrid funds that can deliver extra returns without the administrative and emotional rollercoaster.
The Union Cabinet on Wednesday approved amendment to the DICGC Act to provide account holders access to up to Rs 5 lakh funds within 90 days of a bank coming under moratorium to ensure timely support to depositors. Last year, the government raised insurance cover on deposit five-folds to Rs 5 lakh to provide 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.
Rakesh Wadhawan and his son Sarang Wadhawan, accused of loan default, have been arrested by the Economic Offences Wing.
The government on Wednesday said that all urban cooperative banks and multi-state cooperative banks will come under the supervision of the Reserve Bank of India, a development aimed at providing comfort to depositors and prevent repeat of PMC Bank like scams. The President of India will promulgate an ordinance to this effect, Information and Broadcasting Minister Prakash Javadekar told reporters after the meeting of the Union Cabinet.
'We deposited money just yesterday, but they did not say anything...'
Parliament on Tuesday passed amendments to the Banking Regulation Act to bring cooperative banks under the supervision of the RBI, a move aimed at protecting the interest of depositors.
ED has come across two immovable assets - one flat in Dubai and one land parcel in London. It is examining the valuation of both properties, estimated between Rs 150 crore and Rs 200 crore.
Do not go for riskier options like co-operative bank only for the higher return. Even if you go for them, park only a small portion of your capital there, say Tinesh Bhasin and Sanjay Kumar Singh.
The plea, filed by Delhi-based Bejon Kumar Misra, said the Centre and RBI should be directed to ensure complete insulation and insurance of the hard-earned deposited money of people in various co-operative banks, including nationalised banks, by enacting an appropriate measure of 100 per cent insurance coverage towards the deposited amount.
At the press interaction, Sitharaman said secretaries from the department of financial services and economic affairs will be meeting a deputy governor of RBI soon to look into the "shortcomings" of the functioning of multi-state cooperative banks and see if any amendments can be made to the laws.
The interest offered is mostly 0.5 to 1 per cent more than what other banks offer. Moreover, customer service and long-term association spanning generations are also other reasons for the popularity.
Two of the depositors had died of cardiac arrest, while another, a woman doctor, allegedly committed suicide.
With the above relaxation, more than 70 per cent of the depositors of the bank will be able to withdraw their entire account balance, the central bank said as most of its account holders have an average balance of just about Rs 10,000.
In its EoI document, the bank had said it was open to converting into a small finance bank.
A bench comprising Chief Justice S A Bobe and justices B R Gavai and Surya Kant took note of the submissions of solicitor general Tushar Mehta that the high court order, to the extent of allowing their release from prison, needed to be stayed.
The decision assumes significance in the wake of a scam in the PMC Bank affecting lakhs of customers who are facing difficulties in withdrawing their money due to restrictions imposed by the Reserve Bank of India.
The Reserve Bank on Friday superseded the board of the city-based Abhyudaya Cooperative Bank on concerns emanating from "poor governance" and appointed an administrator to manage the affairs of the lender. In what can be seen as a step that should allay depositors' concerns, the central bank did not put any restrictions or moratorium on deposit withdrawals because of the comfort it gets on the bank's finances, according to people in the know. "(The) action is necessitated due to certain material concerns emanating from poor governance standards observed in the bank.
According to the Trends and Progress Report of the RBI, 98 per cent of frauds in terms of value were related to loans, and their occurrence was spread over several previous years.
One incident should not be used to generalise the health of all cooperative banks, says RBI governor Shaktikanta Das.
Analysts say that PMC Bank case is only going to make matters worse for HDIL and the Wadhawans.
The regulatory actions, undertaken by the RBI and the government, came hours after finance ministry sources confirmed that SBI was directed to bail out the troubled lender. For the next month, Yes Bank will led by the RBI-appointed administrator Prashant Kumar, an ex-chief financial officer of SBI.
Only when we are part of the same family, which will happen down the line, then, of course, we will give them (PMC depositors) all the assurance and the comfort.'
He said trust and confidence were the backbone of any financial system and one should never underestimate the power of ethics and values.
Such minutes will be available within two weeks from the date of its confirmation in the next meeting of the central board and on being signed by the chairman in the same meeting, the RBI said in a statement on its website.
The attachment is linked to a money laundering probe linked to a Rs 1,034 crore worth land 'scam' related to the re-development of a 'chawl' in Mumbai.
The Deposit Insurance and Credit Guarantee Corporation (DICGC) will pay the depositors of 21 stressed cooperative banks, including the Punjab & Maharashtra Co-Operative Bank (PMC Bank), up to Rs 5 lakh within 90 days. The Reserve Bank of India (RBI) had imposed restrictions on the withdrawal of deposits from these banks. Of the 21 banks, 11 are from Maharashtra, five from Karnataka, and one each from Uttar Pradesh, Kerala, Rajasthan, Madhya Pradesh, and Punjab.
"Every time we cut trees, we plant more. It is a rule of the forest department," Javadekar said.
Other major laggards were IndusInd Bank, SBI, Bharti Airtel, ONGC, Tata Steel and Reliance Industries -- falling as much as 6.30 per cent.
While the collapse of a large financial intermediary can wreak havoc on the system because of the interconnectivity, a large business conglomerate too can play spoilsport if the banks have too much exposure to the entity, explains Tamal Bandyopadhyay.
The Reserve Bank on Monday superseded the boards of Srei Infrastructure Finance as well as Srei Equipment Finance, citing concerns over governance and payment defaults, and decided to refer the two NBFCs for resolution under the insolvency law. This is only the second time in as many years that the Reserve Bank of India (RBI) is referring entities for the resolution process under the Insolvency and Bankruptcy Code (IBC) after taking first ever such step in the case of DHFL back in 2019. Superseding the boards of the crisis-hit Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL), the RBI has appointed Rajneesh Sharma, former Chief General Manager of Bank of Baroda as the administrator to manage the affairs of the two companies.
The financial sector has been deeply troubled since 2013. It is now in a full-blown crisis, warns Devangshu Datta.
'The banks cannot pass on the hike in premiums to its customers, according to the norms. The premium won't go up substantially in any case and may be hiked to 12-13 paise (per deposit of Rs 100 a year),' Finance Secretary Rajiv Kumar said.
The ED summoned Varsha Raut for questioning in the PMC Bank money laundering case on December 29, officials had said on Sunday.
SBI's ownership should give confidence to depositors and lenders about the bank's solvency.
If the policy is extended to NBFCs and co-operative banks, they will have to disclose divergence in asset classification and provisioning during RBI inspections in their audited financial reports. Till now, these entities have been exempted from this. At present, there are more than 98,000 co-operative banks and 10,000 NBFCs. Sources said the RBI would concentrate on the top 50 co-operative banks and NBFCs.
The government would be ironing out issues related to the controversial 'bail-in' clause in the earlier Bill, explore hiking the deposit insurance cover of customers, and decide whether the resolution framework should apply to public sector banks.
However, the RBI declined to share details of action being taken on these fraud cases saying "it is not readily available".
Large urban co-operative banks may come to be solely under the provisions of the Banking Regulation Act, even as the smaller among them are to remain within the exclusive fold of the Registrar of Co-operative Societies. The upcoming changes will bring the curtains down on the vexed issue of dual control of UCBs, which has been in vogue for 54 years. The new framework will affect 1,551 UCBs in the country, which had a total business of Rs 7.36 trillion.
© 2026 Rediff.com - Investor Information - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances