Panel To Draft Model Deposit Insurance Scheme Set Up

A committee has been constituted to look into the question of whether the premium amount for deposit insurance should be linked to the specific rating of a non-banking finance company (NBFC). It would also examine whether the burden of premium should devolve on the NBFC or the depositor.

The panel will be chaired by A C Shah, former Bank of Baroda chairman.

The Association of Lease & Financial Services Companies (ALFS) and the Equipment Leasing Association (ELA), the two organisations representing NBFCs, have finalised the terms of reference for the AC Shah committee, which will also prepare a detailed paper on a model deposit insurance scheme.

The paper will be presented to the Reserve Bank of India (RBI) before July 15.

The committee has been set up in the wake of the CRB scandal, in which thousands of depositors lost their money kept with the NBFC promoted by C R Bhansali.

The question of a deposit insurance scheme to protect depositors against such possibilities in the future has been taken up by the Centre too; Prime Minister Inder Kumar Gujral had on Wednesday asked the finance ministry to examine the modalities of introducing such a scheme.