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

Consumer Voice - - In The News -

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.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.