Rbi Moots Insurance Scheme For Nbfc Deposit Holders

The Reserve Bank has proposed the formation of a deposit insurance scheme for deposit holders of non-banking finance companies (NBFCs) on the lines of those provided for bank deposits holders.

The idea was mooted at a meeting held yesterday between Reserve Bank deputy governor S P Talwar and the members of the Equipment Leasing Association (ELA). In the case of banks, the Deposit Insurance and Credit Guarantee Corporation of India (DICGC) provides deposit insurance after banks pay small premium. However, many banks have opted out of the DICGC scheme.

The Reserve Bank also mooted the forming of depositors grievance cells all over the Courtney for NBFC depositors. The RBI also felt that the ELA should be restructured. This is in view of the fact that ELA is always at loggerheads with the Association of Leasing and Financial Services Companies (ALFS).

 

Talwar told Business Standard that RBI had made these suggestions to the ELA for them to ponder over. The suggestions are a fall out of the CRB Capital Markets scam which has brought into focus the plight of depositors with NBFCs. The CRB episode has instilled fear in the minds of retail depositors, particularly those who have placed their money in small and medium sized companies.

Internationally, fixed deposit holders with private finance companies have deposit insurance schemes. RBI has suggested to the ELA that the organisation look into what steps can be taken to start a similar scheme in India too. As of now no concrete steps have been taken regarding a setting up of the depositors insurance scheme. However, if such a scheme is to be set up, it will require the support of the RBI in terms of finance.