New Delhi, Aug 4 (IANS): Depositors with banks and other financial institutions can rest assured as their hard-earned savings will now get enhanced insurance cover of Rs 5 lakhs and this money will be provided to them within 90 days irrespective, whether the bank is undergoing a resolution or going in for liquidation.

The Deposit Insurance and Credit Guarantee Corporation Bill, 2021 on Wednesday got Parliament's nod, with the Rajya Sabha passing the legislation, which has already been cleared by the lower house.

The bill proposes to provide relief to small depositors by providing guarantees on their life savings, increasing the insurance amount on each depositor's bank deposit to Rs 5 lakh in both principal and interest.

The increase of insured amount from Rs 1 lakh to Rs 5 lakh will cover 98.3 per cent of all deposit accounts and 50.9 per cent of deposit value. This is higher than what cover is provided internationally, that is about 80 per cent of deposit accounts and 20-30 per cent of deposit value.

The amount guaranteed under the Act will be available to depositors of all banks and financial institutions including those sectors where the bank has gone into moratorium.

Also, the new legislation will provide a time-bound process to clear the insured deposit amount. This will have to be cleared within 90 days irrespective whether the bank is undergoing a resolution or going in for liquidation.

Various definitions have also been changed under the new bill to cover a larger section of depositors under the deposit insurance programme.

The premium charged by banks for giving this cover is currently 10 paisa for every Rs 100 of deposits. This has been raised to 12 paisa now and can be changed further up but with concurrence of the RBI and the Finance Ministry within a limit.