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Enhanced insurance cover of Rs 5 lakh on bank deposits from Tuesday: RBI

The cover is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the RBI

Press Trust of India 

Insured deposits constitute 28.1% of assessable deposit base at March-end

on has been increased to Rs 5 lakh from Rs 1 lakh effective Tuesday, the Reserve Bank of India (RBI) said in a statement.

The cover is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the RBI.

This, the RBI said, has been done with a view to providing a greater measure of protection to depositors.

On Saturday, Minister Nirmala Sitharaman had made the announcement regarding increasing to Rs 5 lakh in her Budget Speech.

Earlier in the day, Secretary Rajiv Kumar said the Department of Financial Services has given approval for raising deposit from Rs 1 lakh to Rs 5 lakh.

The move will help boost confidence of people in the banking system which has been shaken after a scam last year in Punjab and Maharashtra Cooperative Bank (PMC Bank) which affected lakhs of customers.

As the insurance cover stands increased, the will pay a premium of 12 paise against 10 paise per Rs 100 deposited.

The deposit insurance scheme covers all operating in India, including private sector, cooperative and even branches of foreign There are some exemptions such as deposits of foreign governments, deposits of central and state governments, and inter-

Deposit insurance was static at Rs 1 lakh since 1993.

The Raghuram Rajan Committee on Financial Sector Reforms 2009 had recommended strengthening the capacity of DICGC, a more explicit system of prompt, corrective action, and making deposit insurance premia more risk-based.

First Published: Tue, February 04 2020. 21:21 IST
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