Letter to BS on FRDI Bill and increase in deposit insurance coverage
The DICGC had last increased the limit of deposit insurance 25 years back in 1993 from Rs 30,000 to Rs 100,000.
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Once the Financial Resolution and Deposit Insurance (FRDI) Bill is passed, the Resolution Corporation will take over the functions of Deposit Insurance from the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of RBI. The RBI has, till date, by and large, ensured no loss to the fully protected accounts of the depositors which constitute 92.1 per cent of the total deposits as of March, 2017, if warranted by merger and amalgamation of banks. The FRDI Bill is silent about the likely increase in the deposit insurance coverage. The DICGC had last increased the limit of deposit insurance 25 years back in 1993 from Rs 30,000 to Rs 100,000. As per Inflation Calculator India, Rs 490,000 of 2017 is equal to Rs 100,000 of 1993 and hence, the limit of deposit insurance should be increased to a minimum amount of Rs 500,000.