DICGC faces a claim of Rs 14,000 crore from co-operative banks including PMC: RBI

MUMBAI: The Deposit Insurance and Credit Guarantee Corporation (DICGC) faces a total claim of about Rs. 14,000 crores from the co-operative banks mostly urban cooperative banks including PMC Bank, that are in default, but all the claims may not materialise at the same time and some may even revive, the latest financial stability report said released by the central bank on Friday.

The extent of devolvement on DICGC in the event of all the banks ‘under direction’ or weak banks going into liquidation/ordered to be wound up, would be Rs 14098 crore as of end September, 2019, RBI said. The break-up would be Rs 3,414 crore in the case of state cooperative banks, district central cooperative banks and ₹10,684 crore in the case of UCBs including PMC Bank. DICGC came into limelight since the RBI imposed restriction on PMC Bank due to large defaults and mismanagement at the bank resulting in withdrawal restrictions on depositors.

As a percentage of the deposit insurance fund, these deposits are about 13.9 per cent, RBI said. “It needs to be noted that the banks which are under direction/ weak will go under liquidation over a period, not together at a particular point of time. Weak banks may also witness a revival.”

Insured deposits of banks which are ‘under direction’ or ‘weak’ constituted about 0.4 per cent of the total insured deposits of commercial and cooperative banks as at end-September 2019. DICGC has sanctioned aggregate claims of ₹40 crore with respect to 15 cooperative banks during 2018-19.