Authorities Seemingly To Increase Deposit Insurance coverage Restrict From Rs 5 Lakh – How Does DICGC Insurance coverage Assist Depositors In Circumstances Of Financial institution Fail? | Private Finance Information

Mumbai: The federal government is “actively contemplating” elevating the deposit insurance coverage restrict past the present Rs 5 lakh, a high finance ministry official mentioned on Monday.

Days after the New India Co-operative Financial institution rip-off got here to mild, Division of Monetary Companies Secretary M Nagaraju introduced that such a proposal is within the works.

“The purpose about growing insurance coverage… That’s underneath energetic consideration. As and when the federal government approves, we’ll notify it,” he instructed reporters at a press convention within the presence of Finance Minister Nirmala Sitharaman.

How Does Deposit Insurance coverage Assist Depositors And Mitigate Fears In Circumstances Of Financial institution Fail

A deposit insurance coverage declare will get triggered when a lender goes down, and through the years, the Deposit Insurance coverage and Credit score Assure Company (DICGC) has paid out such claims. The physique collects premiums from banks for the duvet it gives, and a majority of the claims have needed to be accomplished in case of cooperative lenders.

DICGC insured restrict Raised From Rs 1 Lakh To Rs 5 Lakh In 2020

It may be famous that following the PMC Financial institution rip-off, the DICGC insured restrict was raised to Rs 5 lakh from Rs 1 lakh in 2020. The improved deposit insurance coverage cowl of Rs 5 lakh got here into impact from February 4, 2020. Each financial institution used to pay 10 paise as an insurance coverage premium per Rs 100 of deposit. It was raised to 12 paise per Rs 100 in 2020. It can’t be greater than 15 paise at any cut-off date per Rs 100 deposit. The rise was accomplished after a niche of 27 years because it has been static since 1993.