A High Court has directed the Deposit Insurance and Credit Guarantee Corporation (DICGC) to disburse insured deposit claims to account-holders of a cooperative bank placed under liquidation, rejecting DICGC's position that payment could await the liquidator's full and final settlement of the bank's affairs. The depositors, several of them retired individuals dependent on their fixed deposits, had waited over a year after the bank's licence was cancelled without receiving any part of their insured claim amount.
The Court held that the statutory scheme under the DICGC Act, as amended, is specifically designed to insulate small depositors from exactly this kind of prolonged delay: insured deposits, up to the prescribed limit per depositor per bank, are meant to be paid out within a fixed statutory window of the bank's licence cancellation or the liquidator furnishing the requisite claim list, and are not conditional on the liquidator completing the entire, often years-long, liquidation process.
The Court directed DICGC to process and disburse the insured portion of each depositor's claim within the statutorily prescribed period from receipt of the liquidator's claim list, while depositors' claims to any uninsured balance above the insured limit would continue to be dealt with separately through the ordinary liquidation process.