DICGC mops up Rs 9,561 crore premium in first half of fiscal

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The Deposit Insurance and Credit Guarantee Corporation (DICGC), which provides insurance cover to depositors of banks, has collected deposit insurance premium of Rs 9,561 crore from banks during the six months ended September 2021, of which 93.5 per cent was contributed by commercial banks and the rest by co-operative banks.

With this, the Deposit Insurance Fund (DIF), built out of the premia paid by insured banks and coupon income received on investments in government securities, swelled to Rs 1.41 lakh crore as of September 2021, yielding a reserve ratio (ratio of DIF to insured deposits) of 1.81 per cent, up from Rs 1.29 lakh crore in March 2021, the RBI said in the Financial Stability Report (FSR).

The settlement and recovery of claims from banks in the first half of 2021-22 was significantly higher than a year ago, the central bank said. As on December 20, 2021, DICGC has paid Rs 1,374 crore in respect of 1.09 lakh depositors of 16 out of 21 troubled banks – including PMC Bank — that were eligible to receive such pay-outs, it said.

DICGC, headed by RBI Deputy Governor Michael Patra, pays out a maximum of Rs 5 lakh as insurance to the depositor of a troubled bank irrespective of the total amount that the customer has deposited in the bank. It paid Rs 393 crore to depositors in the first six months of the half-year ended September 2021, a rise of 1,334 per cent when compared to Rs 27.4 crore in the same period of last year.

The number of registered insured banks as on September 30, 2021 stood at 2,049 comprising 140 commercial banks (including 43 RRBs, two LABs, six payment banks and 11 small finance banks) and 1,909 co-operative banks. With the present limit of deposit insurance at Rs 5 lakh, 98.1 per cent of the total deposit accounts, amounting to 267.2 crore, and 49.0 per cent, amounting to Rs 78.02 lakh crore, of the total assessable deposits are fully protected, the RBI said.

DICGC Act, 1961 was amended in August 2021 to provide for time bound payment (interim) of deposits to depositors up to the amount insured in the case of banks with restrictions on withdrawal of deposits imposed by the Reserve Bank. In terms of the amendment which came into effect from September 1, 2021 the insured bank is required to submit its claim within 45 days of imposition of such restrictions and the Corporation has to get the claims verified within 30 days and pay the depositors within the next 15 days.

The amendment empowers the DICGC to make interim deposit insurance payouts to troubled banks, even if they are under the Reserve Bank’s all-inclusive directions (AID), within 90 days of imposition of such directions.

In case the Reserve Bank finds it expedient to bring the bank under a scheme of amalgamation/compromise or arrangement/reconstruction, the liability of the Corporation will get extended by a further period of 90 days. The other amendments include raising the limit of 15 paise per Rs 100 of deposits on insurance premium with the approval of the Reserve Bank. Furthermore, the DICGC, with the approval of its board, may defer or vary the repayment period for the insured bank to discharge its liability to DICGC and charge penal interest of 2 per cent over the repo rate in case of delay, it said.

Pvt banks CEOs get 67 times of typical employee as salary

MUMBAI: There’s a huge gap between the compensation paid to the Chief Executive Officer (CEO) of a private bank and its employees.

“For PSU banks, on an average, CEOs earn 3 times the typical employee, while the same was as high as 75 times in the case of small finance banks and 67 times in the case of private banks,” the RBI said in its Report on trend and progress in banking. The corresponding multiple was low for foreign banks as the remuneration received by employees is relatively high. The variation across bank groups remained consistent through 2018-19 and 2019-20, it said.

On November 4, 2019, the Reserve Bank revised its guidelines on compensation, aligning them to the Financial Stability Board norms. The new guidelines became effective from April 1, 2020.

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