BS EDIT: India Needs Higher Deposit Insurance

Published On May 28, 2025

Why This Matters

The government may double the insurance cap to ₹10 lakh. Today, 98% of accounts are insured—but only 43% of total deposits

Insurance Prevents Panic

Banks lend long-term but fund with short-term deposits. Insurance stops panic withdrawals during crises

Tech Accelerates Bank Runs

24x7 digital access speeds up withdrawals. A higher insurance limit reduces tech-driven panic

Lessons from the US

In 2023, panic at Silicon Valley Bank triggered global concern. US regulators protected all deposits to calm markets

Safety Is a Right

Depositors shouldn't have to assess bank risks. Basic banking must come with guaranteed safety

Watch for Moral Hazard

Higher cover must come with tighter regulation. Deposit safety shouldn’t lead to reckless banking