Amid uproar by opposition parties, Rajya Sabha on Wednesday cleared two key Bills aimed at making the credit guarantee facility for bank depositors more efficient and de-criminalising limited liability partnerships (LLPs).
Finance minister Nirmala Sitharaman told the Upper House that the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill will help small depositors, including those of the stressed PMC Bank. The Bill to make sure depositors quickly get the insured amount for their deposits in case of a bank collapse, was passed after a short debate.
Bank depositors get a maximum cover of ₹5 lakh for their deposits but often the payment in the unfortunate event of a bank failure takes a long time. The Bill seeks to ensure that this payment is made within 90 days, even when the bank is placed under a moratorium. The Bill seeks to insert a new Section in the DICGC Act, 1961 to facilitate this.
The move is significant given that several banks including Punjab and Maharashtra Co-operative (PMC) Bank, Yes Bank and Lakshmi Vilas Bank had in recent past faced stress.
Replying to the brief debate, Sitharaman said the legislation would also help depositors of 23 cooperative banks which are under stress, news agency PTI reported. “PMC Bank depositors will also benefit from this bill,” the minister said.
The bill also allows DICGC to raise the ceiling on the amount of premium, with the prior approval of the Reserve Bank of India (RBI).
The Upper House also cleared the Limited Liability Partnership (Amendment) Bill on Wednesday. This Bill seeks to decriminalise certain provisions and improve the ease of doing business. LLP is a preferred legal form among start-ups. There are over 200,000 LLPs in the country.
The idea is to reduce penal provisions in LLP Act from 24 to 22, and to decriminalise 12 provisions. The lapses getting decriminalised are of technical or procedural in nature and since no criminal intent is involved, these need not go to company law tribunals for adjudication.