Depositors to get up to one lakh rupees if bank goes bust, rules Bombay High Court

Consumer Voice in its issue in September 2013 had carried an article on deposit insurance in banks highlighting that bank deposits were insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) only up to Rs 100,000 per depositor per bank.

Under the law, all banks in the country are registered with DICGC. When a bank is ordered to be wound up, the insurance indemnity scheme is invoked, whereby all depositors who have deposits of less than Rs 100,000 are given the exact amount of their deposits, while all depositors who have more than Rs 100,000 in deposits in that bank get only Rs 100,000.

The Bombay High Court has recently upheld this rule while disposing a petition filed by a number of credit societies that had deposited over Rs 20 crore in the Vasantdada Shetkari Sahakari Bank, which was ordered to be wound up after the Reserve Bank of India cancelled its banking license.

The gist of the case is as under:

The credit societies claimed that the deposit insurance scheme covered the entire amount, so the entire money lost by them had to be returned. Further, they claimed that the provisions of the rules were wrongly interpreted and instead of treating each credit society as one unit, every investor in that credit society should be offered the benefit of the insurance scheme. They also said that the classification was arbitrary and discriminatory as it treated depositors with Rs 100,000 and less as different from those who had deposits of more than Rs 100,000.

The High Court rejected these contentions and also ruled that the classification was justified and valid. It also pointed out that, as opposed to a general insurance scheme, banks paid a meagre amount as premium under the DICGC Scheme. Further, the DICGC could not decline to offer cover to any bank registered with it.

Cadbury India will soon be rechristened Mondelez India, after its US-based parent company Mondelez International, which had acquired Cadbury Plc globally in 2010. The move is expected to coincide with the company moving out of its iconic headquarters Cadbury House at Peddar Road in Mumbai, in June this year.

The change in name of the company will have no impact on the packaging of its popular products like Cadbury Dairy Milk, 5 Star, Gems, Bournville, Perk, Celebrations, Choclairs, Halls, Bournvita, Tang and Oreo, which will continue to be sold under the same brand names. The only change consumers will experience is that the new name of the company will appear on the back of pack of the products.

Mondelez is the new corporate identity for the erstwhile Kraft Foods after a restructuring two years back. The Indian arm is now following suit.