It may be time to change the way UCBs and NBFCs raise retail deposits

It may be time to link the higher deposit insurance cover and the way co-operative banks and select non-banks raise retail resources, writes Raghu Mohan

Last fortnight, the Reserve Bank of India (RBI) said that 99.2 per cent of the beleaguered CKP Co-op Bank’s 132,170 depositors will get full payment of their monies. This is mainly due to the fact that the payout by the Deposit Insurance and Credit Guarantee Corporation (DICGC) has been hiked to Rs 5 lakh from Rs 1 lakh.

Given the poor governance at urban co-operative banks (UCBs) in general, is it an opportune time to cap an individual’s deposits in them at Rs 5 lakh —equivalent to the sum assured by the DICGC in case of a bank’s collapse? And