An image circulating on social media of an HDFC Bank passbook carrying a stamp explaining the limited assurance given by deposit insurance scheme to the depositor in the event of a bank failure has caused panic among a section of customers.
The stamp explains the rules governing deposit insurance cover under which only up to Rs 1 lakh will be returned to the depositor if the bank faces liquidation.
Many on social media have linked this message to the crisis at the Punjab and Maharashtra Co-operative (PMC) Bank and thus creating panic among depositors.
The fact is that this is just a general disclosure all banks need to carry on their customers' passbooks as part of a two-year-old Reserve Bank of India (RBI) directive.
HDFC Bank later came out with a clarification on this image. According to the RBI regulations issued in June 2017, all banks including co-operative banks have to mandatorily inform their depositors about the rules of the deposit insurance cover under the Deposit Insurance and Credit Guarantee Corporation (DICGC).
While some banks give this declaration printed on their passbooks, others do not follow. After the image started circulating on social media, HDFC Bank spokesperson has clarified that this is part of the mandatory RBI guidelines.
“This is further to our twitter post last night w.r.t an image of a passbook being circulated via Whatsapp and social media that seems to have caused some concern. The image pertains to information about the deposit insurance cover. The passbooks without printed information have been stamped with the requisite information so as to be fully compliant with extant RBI guidelines. None of us should have cause for concern whatsoever,” the spokesperson said.
This is further to our twitter post last night w.r.t an image of a passbook being circulated via Whatsapp and social media that seems to have caused some concern. The image pertains to information about the deposit insurance cover. (1/3)
— Neeraj Jha (@NeerajHDFCBank) October 17, 2019
The spokesperson further said that the bank is stamping the DICGC disclosure only on those passbooks issued before 2017 which didn’t have the printed disclosure. The RBI guidelines were made it mandatory in June 2017.
An official at the Indian Banks Association (IBA) has said the industry lobby has not issued any special directions to the member banks to give the deposit cover disclosure in the aftermath of the PMC Bank episode.
The deposit insurance guarantee scheme was set up in 1961 to ensure depositors are guaranteed at least some amount in the event of a bank collapse. This amount was enhanced to Rs 1 lakh only in 1993 from Rs 30,000.
According to an SBI report, currently, the DICGC provides for cover of Rs 1 lakh per depositor (since May 1993) for deposits of commercial banks, RRBs, local area banks (LABs) and co-operative banks and rest of the deposit amount is forfeited in the rare event of a bank failure.
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Updated Date: Oct 21, 2019 17:02:53 IST