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Government plans to increase the limit of deposit insurance; Know how will it benefit you
Deposit Insurance: Secretary of the Department of Financial Services M. Nagaraju says that the government is actively considering increasing the limit of deposit insurance from the current Rs 5 lakh. A few days after the alleged scam of New India Co-operative Bank came to light, Nagaraju said that work is going on on such a proposal. Right now this limit is Rs 5 lakh.
The government is also very seriously considering increasing the deposit insurance amount very much. The deposit insurance amount is currently Rs 5 lakh. It means that if there is a bank default now, customers depositing money there will have up to Rs 5 lakh insured. But taking into consideration the inflation, etc., this is very little, taking everything into consideration. It is demanded to increase it on a regular basis.
On this, Department of Financial Services Secretary M. Nagaraju confirms that there is contemplation of increasing the deposit insurance of Rs 5 lakh that is currently there. It was only after the New India Co-operative Bank fraud allegedly occurred that Nagaraju said that such a proposal was in the works.
"As soon as the government approves, we will issue a notification," he said in the presence of Finance Minister Nirmala Sitharaman. However, Nagaraju refused to comment on the crisis of the New India Co-operative Bank. He said that the RBI is looking into the matter.
Deposit insurance claims start when a lender goes under. In the last few years, the Deposit Insurance and Credit Guarantee Corporation (DICGC) has been paying such claims. The body collects premiums from banks for the 'cover' it provides and most of the claims have been made in the case of cooperative lenders. According to reports, the entire amount of 90 percent of the 1.3 lakh depositors of New India Co-operative Bank will come under DICGC.
