{"id":37659,"date":"2025-02-19T19:31:44","date_gmt":"2025-02-19T14:01:44","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=37659"},"modified":"2025-02-27T16:19:03","modified_gmt":"2025-02-27T10:49:03","slug":"rbi-to-raise-deposit-insurance-cover","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/19-02-2025\/rbi-to-raise-deposit-insurance-cover","title":{"rendered":"RBI to Raise Deposit Insurance Cover"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The government is considering increasing the<strong> insurance cover for bank deposits from the current limit of Rs 5 lakh.<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Deposit insurance was introduced in India in <strong>1962<\/strong><strong>,<\/strong> and coverage has thus far been enhanced<strong> six times \u2013 from Rs 1,500 per depositor to Rs 5 lakh now.<\/strong><\/li>\n\n\n\n<li>The deposit insurance scheme was started with 287 banks in 1962; the number of insured banks was 1,997 as of March 31, 2024.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is Deposit Insurance Cover?&nbsp;<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a <strong>subsidiary of the <a href=\"https:\/\/www.nextias.com\/blog\/reserve-bank-of-india-rbi\/\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/blog\/reserve-bank-of-india-rbi\/\">Reserve Bank of India (RBI)<\/a>.<\/strong>\n<ul class=\"wp-block-list\">\n<li>It insures deposits held in Indian banks, providing protection in the event of a bank failure.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Cover: <\/strong>DICGC currently offers insurance coverage of up to \u20b95 lakh per depositor, per bank.\n<ul class=\"wp-block-list\">\n<li>This includes the total of both principal and interest amounts in all types of accounts, such as savings, fixed, current, and recurring deposits.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>DICGC covers deposits in various types of banks, including:<\/strong><strong> <\/strong>Commercial Banks (public, private, and foreign banks), Cooperative Banks (central, state, and urban co-operatives)&nbsp; and Regional Rural Banks (RRBs).<\/li>\n\n\n\n<li><strong>How does it work:&nbsp;<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Registration: <\/strong>Banks must register with DICGC to offer deposit insurance.<\/li>\n\n\n\n<li><strong>Premium Payment:<\/strong> Banks pay a fixed premium to DICGC, which is not passed on to depositors.<\/li>\n\n\n\n<li><strong>Claim Process:<\/strong> If a bank fails, DICGC reimburses depositors up to \u20b95 lakh after verifying claims submitted by the liquidator.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Limitations:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Coverage Limit: <\/strong>The \u20b95 lakh limit may not be sufficient for individuals or businesses with large deposit amounts.<\/li>\n\n\n\n<li><strong>Exclusions: <\/strong>Government and interbank deposits are not covered under DICGC.<\/li>\n\n\n\n<li><strong>Claims Processing Time: <\/strong>Though deposits are insured, the payout may take time as claims are handled through the bank\u2019s liquidator.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Significance of DICGC for Depositors:&nbsp;<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Protection Against Bank Failures:<\/strong> Deposits are protected, up to \u20b95 lakh, even if the bank goes bankrupt.<\/li>\n\n\n\n<li><strong>Encouraging Savings:<\/strong> With insurance protection, depositors are more confident in saving their money in banks.<\/li>\n\n\n\n<li><strong>Broad Coverage: <\/strong>DICGC covers most types of banks, providing widespread protection.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>In light of recent bank crises, such as the issues faced by New India Co-operative Bank, there is an ongoing proposal to increase the insurance limit.<\/li>\n\n\n\n<li>If approved, the increase in the insurance limit would offer greater protection for depositors, especially those with higher deposits in banks.<\/li>\n\n\n\n<li>This would provide additional security and enhance trust in the banking system.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/deposit-insurance-explained-9843069\/\" rel=\"nofollow noopener\" target=\"_blank\"><strong>IE<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The government is considering increasing the insurance cover for bank deposits from the current limit of Rs 5 lakh.<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-37659","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/37659","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=37659"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/37659\/revisions"}],"predecessor-version":[{"id":38078,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/37659\/revisions\/38078"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=37659"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=37659"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=37659"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}