This refers to the deposit insurance limit enhancement in the light of the upcoming Financial Resolution and Deposit Insurance (FRDI) Bill that will be introduced in the next Parliament session. As the name suggests, the insurance coverage should be enhanced to 80 per cent of the total deposit made by each customer. Like other insurance policies, 80 per cent of the sum assured should be returned on maturity or if claimed.
This way the customer won’t lose a substantial amount of investment if the bank performs poorly and thereby the remaining 20 per cent can be utilised in restructuring the assets of the non-performing banks. The age-old regulatory measures need to be revisited and new rules introduced to prevent any potentially fraudulent activities arising from the loopholes in the existing banking system.
The Reserve Bank of India (RBI) as the central bank should tighten banking regulations for the staff and any deviation should be reported to the regulatory committee at the earliest. The central should introduce a rating system for all banks based on their non-performing assets and bad loans along with their financial performance every year so that every customer is aware of the risks.
Every bank should publish online and offline newsletters about their financial performance and financial setbacks every quarter, so that a customer can make investment decision wisely. A vigilance committee should check the ratings from time to time.
Sunanda Mukherjee, Mumbai
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