RBI to introduce risk-based deposit insurance premiums, says Malhotra

RBI Governor Sanjay Malhotra unveiled 22 steps to strengthen banking resilience, simplify forex rules, enhance credit flow, and push rupee internationalisation alongside deposit insurance reforms

The Reserve Bank of India (RBI) on Wednesday proposed reforms in deposit insurance to incentivise sound risk management by banks. While announcing the monetary policy decision, Governor Sanjay Malhotra said the RBI plans to introduce risk-based deposit insurance premiums. This will allow banks with higher credit ratings to lower their costs.

 

The Deposit Insurance and Credit Guarantee Corporation (DICGC) has operated the deposit insurance scheme since 1962, under which all banks pay a uniform premium of 12 paise for every ₹100 of deposits. 

 

Noting that this system does not differentiate between strong and weak banks, Malhotra said the RBI plans to implement a risk-based premium model, under which financially sound banks will pay lower premiums, helping them save costs. The new system is set to take effect from the next financial year.

Additional reforms

During his address, Malhotra also announced 22 additional measures aimed at strengthening the resilience and competitiveness of the banking sector, improving credit flow and ease of doing business, simplifying foreign exchange processes, enhancing consumer satisfaction, and promoting the internationalisation of the rupee.

 

In addition to insurance reforms, the central bank plans to expand acquisition finance to broaden lending opportunities. Malhotra announced that the ceiling on lending against listed debt securities will be removed, and initial public offering (IPO) financing limits will be raised from ₹10 lakh to ₹25 lakh per person.

 

According to the RBI, these steps will ensure effective risk management, provide greater flexibility, and promote responsible lending.

 

October MPC meet

RBI’s Monetary Policy Committee on Wednesday kept the repo rate unchanged at 5.5 per cent and maintained the policy stance at ‘neutral’. The committee also revised its growth forecast for FY26 upward to 6.8 per cent while lowering the inflation forecast to 2.6 per cent.