Deposit Insurance Limit

The deposit insurance limit refers to the amount of savings in bank deposits whose safety is assured if a lender goes bankrupt

From a risk perspective, it is better to spread your deposits across multiple banks, given the extent of the current deposit cover

Currently, with coverage being for Rs 5 lakh, 97.8 per cent of the total number of deposit amounts are fully protected. However, in terms of value only 43.1 per cent of the deposits are insured

Currently, deposits of up to ₹5 lakh are covered under the deposit-insurance scheme of Deposit Insurance and Credit Guarantee Corporation

An alternative targeted insurance approach with full coverage for certain sections of customers like small depositors and senior citizens can be explored

The Reserve Bank has cancelled the licence of Purvanchal Co-operative Bank, Ghazipur, Uttar Pradesh as it does not have adequate capital and earning prospects. The Commissioner for Cooperation and Registrar of Cooperative Societies, Uttar Pradesh has also been asked to issue an order for winding up the bank and appoint a liquidator, the RBI said in a statement. On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to Rs 5 lakh only from Deposit Insurance and Credit Guarantee Corporation (DICGC). As per the data submitted by the Purvanchal Co-operative Bank, about 99.51 per cent of the depositors are entitled to receive full amount of their deposits from DICGC, the RBI said. Giving details, the RBI said the cooperative bank with its present financial position would be unable to pay its present depositors in full. "The bank does not have adequate capital and earning prospects," it said, and added public interest would be .

Find out how governments and central banks ensure that the depositors' money is protected in case of fallout, like Silicon Valley Bank (SVB) here

At Vigyan Bhawan, the Prime Minister said banks play an important role in the progress of any nation

By March 2020, 357 urban cooperative banks (UCBs) had failed in the country, leading to payment of Rs 4,903 crore in claims

The announcement covers 98.3% of all deposit accounts and 50.9 per cent of the deposit value, Finance Minister Nirmala Sitharaman said

The Rs 5-lakh cover brings around 93 per cent of all deposit accounts and 34 per cent of the value of deposits under it

The Reserve Bank does not see any major impact on the balance-sheets of banks due to the five-fold hike in deposit insurance to Rs 5 lakh. Following the failure of a number of cooperative banks, with the city-based PMC Bank being the latest and the largest last year, the budget allowed the Deposit Insurance and Credit Guarantee Corporation (DICGC) to raise deposit insurance coverage to Rs 5 lakh from Rs 1 lakh. "The premium is something, which we consider, will increase from 10 paise to 12 paisa per Rs 100 for the time being. So, the impact on banks' balance sheets is not likely to be much," RBI Deputy Governor B P Kanungo told reporters during the post-policy presser. The hike in deposit insurance coverage has been a long pending demand from bank depositors and it recently came to fore after the crisis at Punjab & Maharashtra Cooperative (PMC) Bank. It can be noted that in 2019 alone more than 30 cooperative banks went belly up in Maharashtra alone. The DICGC, a wholly-owned ...

Finance minister had announced hiking the deposit insurance limit to Rs 5 lakh for each bank depositor

Bankers say move will not dent their balance sheets significantly, but will take up the matter with RBI, which they say can share some of the burden

The increase in deposit insurance cover is being done after 27 years

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Second, risk-based premium should be introduced, based on supervisory ratings for banks

At present, an individual's aggregate deposits in a bank, including fixed deposits, are insured for up to Rs 1 lakh by DICGC

RBI asks arm to create model that'll make banks pay premiums depending upon their risk factor