 Hello and welcome to NewsClick. Today we have with us Mr. C.P. Krishnan, the joint secretary of Bank Employees' Federation of India. We will discuss with him about the recent announcement on the increase in the guarantee for the deposit in the bank and the other issues relating to the banking crisis in the country. Welcome sir. Sir, recently in the recent budget the finance minister has announced that the insurance for the customers' money in the bank deposits will be increased to 5 lakhs from 1 lakh. So what is the interpretation we can make on it and what is the role the deposit insurance and credit assurance corporation is playing over this? Sir, the DICGC, Deposit Insurance Credit Guarantee Corporation, it came into existence from 1962. So many banks have failed during that period. Private banks, tens and tens of banks have failed. So that is why there was a necessity to have that corporation and it was incorporated as an act. Subsequently, so many amendments have been made. Particularly in 1978, the Tarawa amendments have been made in the act and from 1981, in addition to deposit, they have also started taking care of credits, particularly private sector credits. From 2003 onwards again the credits have been dropped and now even though the name is there, DICGC, it is only taking care of the deposits. Initially at the time of incorporation, only 1500 rupees was the amount of insurance, then it was raised to 5,000, 10,000, then 30,000, then now 1 lakh in 1993 and 2010, February 4, it has been increased to 5 lakhs. This corporation is a subsidiary of Reserve Bank of India, wholly owned by the government. So it takes care of the in case a bank fails, it ensures the amount of deposit to the extent of 5 lakhs as of now. But the fact remains, before 1969, many private banks failed. After 1969 also, even though many private banks failed and those banks have been rescued and bailed out by public sector banks. For instance Bank of Tamil Nadu, Bank of Tanjavur, Bank of Kuchin, Poorbanchal Bank and Global Trust Bank, these banks have been merged with public sector banks and the money of the depositors have been saved. That was the policy of the government of India. Even now they are trying to now rescue S bank also. But in case the government changes the policy and winds up any private bank, this 5 lakh insurance will be of much use to the depositors. As far as the public sector banks are concerned, it has a sovereign guarantee. Whether it is State Bank of India or Indian Bank, Indian Oasis Bank, Bank of Bharata, Bank of India or any public sector bank, the money deposited in the public sector banks or the regional road banks are guaranteed by the government, sovereign guarantee is there. And therefore the question of liquidation as of now does not arise. But in the DA CGC, public sector banks are also covered. In fact in the latest premium in 2018-19, some 12,000 crores premium has been paid. Out of 12,000 crores, 9,000 crores, 75% has been paid only by the public sector banks. But it is actually not no need at all. There is no necessity for public sector banks to be covered because it is enjoying the sovereign guarantee. The disbursement if you see only the primary sector banks up to 1969, they got some 300 crores or so. After that only the cooperative banks, the depositors of the cooperative banks have been benefited out of this act to the extent of 4,355 crores from 1963 till date. So it is mainly for the cooperative banks depositors. The customers or the depositors of PMC are yet to get any money from the bank because there is a difference between the condition of liquidation and suspension. So if the operation of the bank is being suspended, the customer has to suffer till something, the next step is taken by the government of India or the reserve bank. That's right. Really the customers of PMC are in a very pathetic condition. The operations have been suspended somewhere in September last year and till 6 months they were ready to give only 1000 rupees initially. After a huge protest, then it was raised to 10,000, then 25,000, 40,000, 50,000. Even though if a person is having 1 crore deposit or 50 lakhs deposit, he can withdraw only up to 50,000 rupees for 6 months. And that has put a lot of stress and strain and people have become despair. More than 10 people have died for want of medical emergency, some have committed suicide, some have not been able to cater to their daily needs. So many sufferings are there and lakhs of customers are put into great difficulties. Till now the issue has not been resolved and these 5 lakhs out of DICGC will not be available to them at all. So what sense that the claim of the government of India that we have raised from 1 lakh to 5 lakh is? That is absolutely not applicable in this case at all. In fact, Madam Nirmala Sita Raman very proudly announced very recently in Mumbai, when I came I saw people in tears. Now that I have increased the money from 1 lakh to 5 lakhs but that has got no sense with regard to PMC at all. Punjab Maharashtra corporate department has no sense at all. And even I tell you, even if the DICGC coverage is increased to 15 lakhs, the money part as far as the money part is concerned 52% of the depositors money will not be protected. So only 47% of the money will be protected. Even though in terms of number, maybe around 70-80% of the members, even 92% of the account holders may be protected. With regard to money, only 47% of the depositors money will be protected. See for instance, in the case of latest figure, if you take out of 217 crores, 200 crores of accounts are covered even with 1 lakh. And it will be more, it will be more, with the 5 lakhs it will be 98%. But in terms of money, people having 15 lakhs and above up to 1 crore. And 1 crore and above, they constitute a major portion of around 53%. That money will not be covered under this scheme. So this is more of an advertisement kind of a thing rather than an useful announcement by the government? That we can't say exactly. Increase from 1 lakh to 5 lakhs definitely is a good measure. But the premium, again, the premium part 75% is paid by public sector bank. That has to be dispensed with. And it is only the premium has to be collected from the needy or the government has to come to the rescue. And above all, why these banks are failing? That is a major question. Is there anything to do with the mechanism of the RBI in inspecting these banks? Correct. Actually, the mechanism of RBI is a thorough failure. Recently, in order to dispense with the recruitment of staff in the inspection department, they have allowed self-certification by the concerns themselves. That has caused a lot of problems. The Reserve Bank's inspection mechanism is absolutely poor. They are shamelessly filing a writ or the counter in Bombay High Court stating that they have been misled by PMC Bank. Central Bank can say that we have been misled. Then what is the point of this kind of inspection? They are answerable.