Safeguarding depositors’ money key to banks’ prosperity: PM Modi

Safeguarding depositors’ money key to banks’ prosperity: PM Modi
File photo of ModiANI

New Delhi: Taking a swipe at previous regimes, Prime Minister Narendra Modi said on Sunday that his government believes in solving problems and not avoiding them.

He said this while speaking at a function on the theme “Depositors First: Guaranteed Time-bound Deposit Insurance Payment up to Rs 5 Lakh” here.

Observing that any country can save the problems from getting worse only by their timely resolution, the Prime Minister said that for years there was a tendency to avoid problems.

“Today’s new India strives for solving problems, today India does not avoid problems,” he said.

There was a time when depositors would have to wait for their own money for ages from the stressed bank, he said, adding that the government by amending laws has made it mandatory for refund up to Rs 5 lakh of their deposits within 90 days of imposition of moratorium or restrictions.

Recalling his days as chief minister of Gujarat, Modi said, he had to deal with so many depositors but could not do much for them.

He said he had written many letters to the Government of India then about the plight of such hapless depositors and requested for raising deposit insurance cover to Rs 5 lakh from Rs 1 lakh.

However, the previous regime ignored it, Modi said, adding, “the then government did not listen to people so they changed the government and brought me as the Prime Minister. I raised the deposit insurance cover in the interest of people”.

Deposit insurance up to Rs 5 lakh covers all deposits such as savings, fixed, current and recurring deposits in all commercial banks. Deposits in state, central and primary cooperative banks, functioning in states and Union Territories are also covered.

With a deposit insurance coverage of Rs 5 lakh per depositor per bank, the number of fully protected accounts at the end of the previous financial year constituted 98.1 per cent of the total number of accounts as against the international benchmark of 80 percent.

Last year, 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. It was raised to 12 paise per Rs 100 in 2020. It cannot be more than 15 paise at any point in time per Rs 100 deposit.

It is to be noted that the enhanced deposit insurance cover of Rs 5 lakh is effective from February 4, 2020. The increase was done after a gap of 27 years as it has been static since 1993.

Observing that banks play a major role in the prosperity of the country, Modi said, for the prosperity of the banks, it is equally important for the depositors’ money to be safe.

Over the years, by merging many small public sector banks with large banks, their capacity, capability and transparency have been strengthened in every way, Modi emphasised.

When RBI monitors co-operative banks, it increases the confidence of the common depositor in them, he said while talking about another legislation that brought cooperative banks under the control of the central bank.

The Prime Minister said the problem was not only about the bank account, but also about the delivery of banking services to the remotest villages in the past.

Today, in almost every village of the country, the facility of a bank branch or a banking correspondent has reached within a radius of 5 km, he said, adding, the common citizen of India is able to do even the smallest transactions digitally anytime, anywhere, 24 hours a day.

Stressing that there are many such reforms that have helped India’s banking system run smoothly even in the biggest calamity in 100 years, Modi said, when even the developed countries of the world were struggling to provide help to their citizens, India provided direct help to almost every section of the country at a fast pace.

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