The Finance Ministry is currently reviewing the possibility of extending the insurance cover on bank deposits from a limit of Rs 5 lakh. It is agreed to increase it and if your bank sinks, in which you have deposited the money, then you can get more than 5 lakh rupees cover. 5 lakh insurance cover was introduced five years ago.
According to Business Today sources, it has been indicated that the revised deposit insurance scheme can be launched only by the end of the current calendar year. Deposit insurance provides security of a fixed amount of their bank saving to depositors in case of sinking of the bank. The limit of 5 lakh rupees decides that even if the bank is bankrupt, you will get such an amount at least.
Right now the ministry is reviewing this proposal
Sources in the ministry said that the revised insurance limit is still being analyzed, yet the government will consider the proposal in a thorough consultation before making the official announcement. Deposit Insurance and Credit Guarantee Corporation (DICGC) is responsible for the management of Deposit Insurance. It collects premiums from banks, which is currently fixed at 0.12% on Rs 100 deposit.
Limit increased in the year 2020
The current insurance limit of Rs 5 lakh was implemented on April 1, 2020. This is much higher than the previous limit of Rs 1 lakh, which was unchanged for 27 years. This amendment has been done after Punjab and Maharashtra Cooperative Bank crisis.
In February this year, Financial Services Secretary M. Nagaraju confirmed that the proposal to increase the insurance limit is going on and the notification will be issued even after the final decision was taken by the Union Cabinet. His statement came immediately after the Reserve Bank of India preventing the new loan from the New India Co-operative Bank issuing a new loan and suspending the deposit with six months.
According to the official data of the website, DICGC settled claims worth Rs 1,432 crore in FY 24, which belonged to all cooperative banks and received a premium of Rs 23,879 crore in the same period. So far, DICGC has 1,996 insured banks registered.