No indication of Bank Deposit Insurance increasing beyond Rs 1 Lakh per Account - DICGC
DICGC response to this RTI query will hold immense significance, what with multiple instances of banks - both commercial and cooperative becoming victim of frauds, thereby putting the savings of people at risk...
Dec 3, 2019, 21:05 IST
DICGC insures all Bank deposits and have confirmed that depositors in failed or liquidated banks will get only a cover of upto Rs 1 Lakh irrespective of their deposit volume in their accounts.
Deposit Insurance and Credit Guarantee Corporation (DICGC) has confirmed today that they have no indication of the government raising the insurance limit of Rs 1 Lakh on individual deposits in Banks.
DICGC, a wholly owned subsidiary of Reserve Bank of India was responding to the RTI query filed by a PTI journalist, seeking information on proposal to raise the insurance limit beyond Rs 1 Lakh.
Earlier in November, India’s Finance Minister Nirmala Sitharaman had talked about bringing in a legislation on raising the insurance cover on individual Bank deposits from the current bar of Rs 1 Lakh. She made this statement following a pitch by Sahakar Bharati, a non-profit with office bearers close to RSS seeking an increase of limit to Rs 5 Lakh instead of the current Rs 1 Lakh.
DICGC insures all Bank deposits and have confirmed that depositors in failed or liquidated banks will get only a cover of upto Rs 1 Lakh irrespective of their deposit volume in their accounts.
"Under the provisions of Section 16 (1) of the DICGC Act, 1961, if a bank fails/gets liquidated, the DICGC is liable to pay to each depositor through the liquidator, the amount of his deposit up to Rs one lakh as insurance cover, for both principal and interest amount held by him in the same right and same capacity at all the branches of a bank taken together," - DICGC
Over the years, the level of insured deposits as a percentage of assessable deposits has declined from a high of 60.5% in 2007-08 to 28.1% in 2018-19, as per DICGC data.
DICGC covers all commercial banks, including branches of foreign banks functioning in India, local area banks and regional rural banks.
All eligible cooperative banks as defined in Section 2(gg) of the DICGC Act are also covered by the deposit insurance scheme.
"Each depositor in a bank is insured up to a maximum of Rs one lakh as on the date of liquidation/cancellation of bank's license or the date on which the scheme of amalgamation/merger/reconstruction comes into force," - DICGC.
The response assumes significance with numerous instances of different banks becoming victim of frauds, putting at risk the savings of people.
Government owned banks have reported frauds of over Rs 95,700 crore in the first six months of the current fiscal. Cooperative Banks have also been picked up for internal frauds, leading to risk on Bank deposits of people.
"According to Reserve Bank of India (RBI), frauds as per year of reporting, as reported by Public Sector Banks (PSBs), during the period from April 1, 2019 to September 30, 2019 is 5,743 involving a total amount of Rs 95,760.49 crore," Finance Minister Nirmala Sitharaman
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