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Cabinet Approval on July 28, 2021

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The Union Cabinet headed by Prime Minister Narendra Modi approved several important initiatives. They are

  • Amendment to the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961
  • Multilateral Memorandum of Understanding (MoU) signed by International Financial Services Centres Authority (IFSCA)
  • Creation of 2 posts each of judicial, administrative members in Central Administrative Tribunal (CAT) benches in Jammu & Kashmir (J&K)
  • Amendment to Limited Liability Partnership Act (LLP), 2008.

Amendment to DICGC Act, 1961

Deposit Insurance & Credit Guarantee Corporation (Amendment) Bill 2021 will amend the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961.

i.The new amendment provides account holders access to their deposits of up to INR 5 lakh funds within 90 days of a bank coming under Moratorium imposed by RBI. Prior to this, account holders had to wait till liquidation or restructuring of a distressed bank to get their deposits.

ii.Depositors bank deposit will be insured upto INR 5 lakh in each bank for both principal and interest.

  • The DICGC Bill, 2021 will cover 98.3% of all deposits and in terms of deposit value, 50.9% deposit value will be covered. The Global deposit value stands at 80% of all deposit accounts and covers only 20-30% of deposit value.

Insurance on Deposits

i.All deposits in public and private sector banks, local area banks, small finance banks, regional rural banks, cooperative banks, Indian branches of foreign banks and payments banks are all insured by the DICGC, a fully owned subsidiary of the RBI.

ii.Currently, Banks pay a minimum of 10 paise on every INR 100 worth of deposits to DICGC as premium for the insurance cover. The premium has now been raised to a minimum of 12 paise (Not exceeding 15 paise).

Multilateral MoU signed by IFSCA, Gujarat

The cabinet approved a multilateral MoU signed between the International Financial Services Centres Authority (IFSCA), International Organization of Securities Commissions (IOSCO), and International Association of Insurance Supervisors (IAIS).

  • It is one of the biggest multilateral forums with several regulators, and has 124 signatories.
  • By joining this forum, India will be able to enable all kinds of exchange of information and ease of doing business for companies registering in the GIFT City.

i.GIFT City at Gandhinagar, Gujarat is India’s 1st Operational smart city and International Financial Services Centre (IFSC).

  • IFSCA regulates financial products, financial services, or financial institutions in an IFSC, which may be notified by the central government.

ii.In order to ensure Ease of doing business and to stay consistent with the principles laid down by IOSC, the Ministry of Finance has proposed the IFSCA (Capital Market Intermediaries) Regulations, 2021 (Intermediaries Regulations).

Creation of posts for Jammu and Srinagar benches of CAT

2 New Posts – One judicial member and one administrative member each will be created for Jammu & Srinagar benches of Central Administrative Tribunal (CAT). The CAT adjudicates service matters of government employees.

  • The creation of new posts is aimed at providing speedy and affordable justice to the employees of UTs of Jammu & Kashmir and Ladakh.
  • Established in 1985, CAT acts as an effective mechanism to solve disputes arising out of service matters of government employees.

Amendment to Limited Liability Partnership Act (LLP), 2008

The Government approved the Limited Liability Partnership (Amendment) Bill, 2021 which amends the Limited Liability Partnership Act (LLP), 2008.

  • It is the 1st time that changes are being made to the LLP, 2008 since it came into effect in 2009.
  • The LLP Act is implemented by the Ministry of Corporate Affairs (MCA).

i.Under the amended law,

  • 12 Offences which deal with procedural and technical violations have been proposed to be decriminalized & 1 provision (Section 73) containing criminal liability has been proposed to be omitted.
  • It will reduce the total number of penal provisions under the LLP Act to 22, compoundable offence – 7, non-compoundable offence – 3.
  • It will ensure Ease of doing business for law abiding LLPs. Around 2.30 lakh LLPs in India are expected to benefit due to decriminalization.

iii.The amendment will expand the scope of LLP.

  • At present, LLPs whose turnover in any FY does not exceed INR 40 Lakhs or the Contribution (Capital) from Partner does not exceed INR 25 lakhs are exempt from provisions of audit.
  • After amendment, Partner’s Contribution of INR 25 lakhs will be increased to INR 5 crore and the Turnover size of INR 40 Lakhs will be increased to INR 50 crore.

Recent Related News:

i.February 4, 2021, Based on the recommendations of the Company Law Committee (CLC) headed by Corporate Affairs Secretary, Rajesh verma, MCA   has started the process of Decriminalization of Compound Offences under the LLP Act, 2008.

ii.March 29, 2021, FICCI and IFSCA signed a MoU to establish a framework for collaboration and co-operation for the development of GIFT IFSC City.

About Ministry of Corporate Affairs (MCA)

Union Minister – Nirmala Sitharaman (Rajya Sabha, Karnataka)
MoS – Rao Inderjit Singh (Gurgaon, Haryana)

About Deposit Insurance and Credit Guarantee Corporation (DICGC)

Chairman – Dr. M.D. Patra (Deputy Governor of RBI). Nominated by RBI under Section 6(1)(a) of The Deposit Insurance and Credit Guarantee Corporation Act, 1961.
Headquarters – Mumbai, Maharashtra