PM Modi highlights on saving banks and protecting depositors

Prime Minister Narendra Modi said that the move to increase deposit insurance cover to ₹5 lakhs from ₹1 lakh, will fully insure ₹76 lakh crore of savings. Modi said, “Such a comprehensive insurance cover is not there even in developed nations. This will cover almost 98% of all banking accounts.”

Recalling his time as a Chief Minister, Modi said, “I remember clearly when I was CM and a bank faced problems, people used to catch our necks only…Their pain was natural and at that time, I had repeatedly requested the Govt. of India to raise the ₹1 lakh deposit insurance amount to ₹ 5 lakh so that maximum households are satisfied.”

Beyond this, the Prime Minister also touched upon the move to introduce a 90-day deadline for depositors to get their money back. “I am happy that within 90 days of the law being notified, thousands of depositors have already been repaid,” he said, adding that banks play a big role in the nation’s prosperity, however, to ensure prosperity of banks, money of depositors need to be safeguarded.

“To save banks, we have to protect depositors and by doing this, we have saved banks as well as depositors,” he said.

At the event, RBI governor Shaktikanta Das had pointed out that the “first set of banks where 90 days were completed on November 29, all the claims were processed,” with the claim receipt and settlement process now automated by the DICGC.

Elaborating on the subject of banking infrastructure in the country, Modi highlighted that, “Today, almost every village has a banking facility within 5 kilometers with 8.5 lakh banking touch points.” He noted this to be a significant change from a time “banks are just for the well-off and rich.The country's banking system has now been democratized in the true sense of the word.”

According to the Prime Minister, the progress in banking infrastructure has provided maximum benefit to the women of the country. Citing the latest NFHS data, Modi pointed out that 80% of women have their own bank accounts.

The RBI Governor also spoke on “new governance guidelines for commercial banks”, adding that a committee has been constituted for “bringing about reforms in the urban co-operative sector. To strengthen resilience, we are now doing root cause analysis, looking at business models of banks to see if they are viable, without, of course, interfering in the commercial flexibility which the banks must have for their success.”