Guj HC gets plea to hike insurance sum over bank deposits

The Gujarat High Court today sought the Reserve Bank of India's stand on a plea for raising the sum of insurance on deposits of the account holders in the cooperative and other banks from Rs 1 lakh to Rs 10 lakh.
Under the Deposit Insurance and Credit Guarantee Corporation Act, 1961, a cooperative bank depositor gets Rs 1 lakh as insurance money in case the bank goes bankrupt.
A division bench of Chief Justice R Subhash Reddy and Justice V M Pancholi sought the RBI's stand while issuing notice to it, returnable by the next day of hearing after two weeks.

Petitioner Prakash Kapadia said the money deposited in banks having an insurance of up to Rs 1 lakh only is not safe in face of the rising instances of various cooperative banks going bankrupt.
Accordingly, the petitioner said, the Rs 1 lakh insurance amount is not enough and should be increased to Rs 10 lakh.
He argued in his petition that the RBI Rule dated May 31, 1993 wherein the insurance money for depositors was raised to Rs 1 lakh from Rs 30,000 needs reconsideration in wake of the rising bankruptcy among the cooperative banks and mounting non-performing assets among others.

Since 2001, 76 co-operative banks have gone bankrupt in Gujarat, he said.
At the same time, the graph of the non-performing assets of the country's top nationalised banks have risen sharply in recent years which also put depositors at the risk, he said.