Section 16 of The Deposit Insurance and Credit Guarantee Corporation Act, 1961 in hindi
- (1)Where an order for the winding up or liquidation of an insured bank is made, the Corporation shall, subject to the other provisions of this Act, be liable to pay to every depositor of that bank in accordance with the provisions of section 17 an amount equal to the amount due to him in respect of his deposit in that bank at the time when such order is made: Provided that the liability of the corporation in respect of an insured bank referred to in clause (a) or clause (b) 1[of sub-section (1) of section 13] 2[or clause (a) or clause (b) of section 13C] shall be limited to the deposits as on the date of the cancellation of the registration: Provided further that the total amount payable by the Corporation to any one depositer in respect of his deposit in that bank in the same capacity and in the same right shall not exceed one thousand and five hundred rupees: Provided further that the Corporation may, from time to time, having regard to its financial position and to the interests of the banking system of the country as a whole, raise, with the previous approval of the Central Government, the aforesaid limit of one thousand and five hundred rupees.
- (2)Where in respect of an insured bank a scheme of compromise or arrangement or of reconstruction or amalgamation has been sanctioned by any competent authority and the said scheme provides for each depositor being paid or credited with, on the date on which the scheme comes into force, an amount which is less than the original amount and also the specified amount, the Corporation shall be liable to pay every such depositor in accordance with, the provisions of section 18 an amount equivalent to the difference between the amount so paid or credited and the original amount, or the difference between the amount so paid or credited and the specified amount, whichever is less: Provided that where any such scheme also provides that any payment made to a depositor before the coming into force of the scheme shall be reckoned towards the payment due to him under that scheme, then the scheme shall be deemed to have provided for that payment being made on the date of its coming into force.
- (3)For the purposes of this section, the amount of a deposit shall be determined after deducting therefrom any ascertained sum of money which the insured banks may be legally entitled to claim by way of set off against the depositor in the same capacity and in the same right.
- (4)In this section,--
- (a)"original amount" in relation to a depositor means the total amount due by the insured bank immediately before the date of coming into force of the scheme of compromise or arrangement or, as the case may be, of reconstruction or amalgamation to the depositor in respect of his deposit in the bank in the same capacity and in the same right: Provided that where under the proviso to sub-section (2), the scheme is deemed to have provided for any payment being made on the date of its coming into force the amount of such payment shall be included in calculating the original amount;
- (b)"specified amount" means one thousand and five hundred rupees, or, as the case may be, the amount fixed by the Corporation under the third proviso to sub-section (1).
Summary
- The Corporation is responsible for paying depositors if an insured bank is forced to close and its assets are sold (winding up).
- This payment must be calculated based on the total amount the bank owed the depositor at the exact time the closure order was made.
- When banks are merged or reorganized, the Corporation pays any gap if the new arrangement gives the depositor less than their original balance.
- Before making a payment, the Corporation must subtract any debts the depositor legally owes to that specific bank.
Practical examples
FAQ
1. How does a debt I owe to the bank affect my insurance claim under the 1961 Act?
Section 16 of the Act requires that any money you are legally required to pay the bank is subtracted from your total deposit balance before the Corporation calculates your insurance payment.
2. If my bank's registration is cancelled under Section 13, am I still covered by the Corporation?
Yes, but Section 16 of the Act specifies that the Corporation's liability is strictly limited to the deposit amount as it existed on the specific date the registration was cancelled.
3. What happens if a bank merger pays me less than my actual savings?
Section 16 of the Act protects you by making the Corporation liable to pay the difference between what the merger scheme gives you and your original deposit amount, up to the legal limit.
Test yourself
Q1.Under Section 16 of The Deposit Insurance and Credit Guarantee Corporation Act, 1961, what is the maximum amount the Corporation is generally liable to pay one depositor?
Q2.According to Section 16 of The Deposit Insurance and Credit Guarantee Corporation Act, 1961, what must be done if a depositor owes money to the bank?
Q3.Under Section 16 of The Deposit Insurance and Credit Guarantee Corporation Act, 1961, whose approval is required to raise the deposit insurance limit?
Q4.Under Section 16 and Section 17 of The Deposit Insurance and Credit Guarantee Corporation Act, 1961, how is the Corporation's payment obligation triggered during a bank closure?
Q5.According to Section 16 of The Deposit Insurance and Credit Guarantee Corporation Act, 1961, what determines the amount paid if a bank reorganization gives a depositor less than their original balance?
Q6.Under Section 16 of The Deposit Insurance and Credit Guarantee Corporation Act, 1961, if a bank's registration is cancelled under Section 13, how is the liability limited?