Compensation delayed is compensation denied

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Justice delayed is justice denied. The same adage holds for insurance and compensation. The Union government has taken a big step by deciding to put a 90-day time limit to compensate customers if banks go down. The amount of compensation was earlier raised from Rs 1 lakh to Rs 5 lakh.

The time limit of 90 days is going to be help the customers of banks that go down. According to the practice followed so far, account holders in banks had to wait for years till the liquidation or restructuring of the organisation to get back their money which was insured against defaults. If a bank goes down, the customers go through a harrowing time worrying about the security of their hard-earned money.

While the move was approved by the Union cabinet on Wednesday, the government has plans to introduce the Deposit Insurance & Credit Guarantee Corporation (Amendment) Bill 2021 in the ongoing Monsoon session of the Parliament. Once it is implemented it will go a long way in allaying the apprehension of numerous depositors and customers of any bank that might face stormy times.

However, the move also contains a message that one should ponder over. Since one’s deposit is secured only to the extend of Rs 5 lakh, people can consider splitting their deposits in more than one bank in multiples of Rs 5 lakh. It will offer them complete peace of mind.

Moreover, one should think of diversifying their portfolio and not put a lot of money in bank FDs or savings accounts that anyway are offering increasingly low returns. Financial planners have long advised distributing one’s wealth into guaranteed-return instruments, equities, mutual funds and gold. The announcement by the Centre on Wednesday should trigger a scrutiny of one’s investment strategy. It is never too late for a relook.