Insurance cover on bank deposits raised to Rs 5 lakh effective today; move to help boost confidence of people in banking system

  • The cover is provided by the Deposit Insurance and Credit Guarantee Corporation, a wholly-owned subsidiary of the RBI

  • As the insurance cover stands increased, the banks will pay a premium of 12 paise against 10 paise per Rs 100 deposited

  • The Raghuram Rajan Committee on Financial Sector Reforms 2009 had recommended strengthening the capacity of DICGC

New Delhi: Insurance cover on bank deposits has been increased to Rs 5 lakh from Rs 1 lakh effective Tuesday, the Reserve Bank of India (RBI) said in a statement.

The cover is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the RBI.

This, the RBI said, has been done with a view to providing a greater measure of protection to depositors.

 Insurance cover on bank deposits raised to Rs 5 lakh effective today; move to help boost confidence of people in banking system

Representational image. Reuters.

On Saturday, Finance Minister Nirmala Sitharaman had made the announcement regarding increasing insurance cover to Rs 5 lakh in her Budget Speech.

Earlier in the day, Finance Secretary Rajiv Kumar said the Department of Financial Services has given approval for raising deposit insurance cover from Rs 1 lakh to Rs 5 lakh.

The move will help boost confidence of people in the banking system which has been shaken after a scam last year in Punjab and Maharashtra Cooperative Bank (PMC) Bank which affected lakhs of customers.

As the insurance cover stands increased, the banks will pay a premium of 12 paise against 10 paise per Rs 100 deposited.

The deposit insurance scheme covers all banks operating in India, including private sector, cooperative and even branches of foreign banks. There are some exemptions such as deposits of foreign governments, deposits of central and state governments, and inter-bank deposits.

Deposit insurance was static at Rs 1 lakh since 1993.

The Raghuram Rajan Committee on Financial Sector Reforms 2009 had recommended strengthening the capacity of DICGC, a more explicit system of prompt, corrective action, and making deposit insurance premia more risk-based.

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

Updated Date: Feb 05, 2020 08:25:02 IST


CORONAVIRUS

COVID-19 Information Centre

  • 24 hrs. helpline no. -
  • +91-11-23978046
  • 24 hrs. toll free no. -
  • 1075

India

  • Active Cases

  • Total Confirmed

  • Cured/Discharged

  • Total DEATHS

*change over the previous day
Data Source: Ministry of Health and Family Welfare, India
Updated: Apr 09 (08 AM)
Hospitals & Testing centres

World

  • Active Cases

  • Total Confirmed

  • Cured/Discharged

  • Total DEATHS

*change over the previous day
Data Source: Johns Hopkins University, U.S. (www.jhu.edu)
Updated: Apr 09 (08 AM)
Hospitals & Testing centres