Bank Deposit Insurance Program:
The Central government has highlighted the significance of increase in bank deposit insurance cover, in case of problems occurring such as closure, from Rs 1 lakh to Rs 5 lakh. PM Modi is to address the nation on Bank Deposit Insurance.
- Earlier, there used to be a bank deposit insurance cover of Rs 1 lakh for the deposit of the same amount or more under the ‘Deposit Insurance Credit Guarantee Scheme’.
- Deposit insurance is providing insurance protection to the depositor’s money by receiving a premium.
- The government has set up Deposit Insurance and Credit Guarantee Corporation (DICGC) under RBI to protect depositors if a bank fails.
- DICGC charges 10 paise per ₹100 of deposits held by a bank. The premium paid by the insured banks to the Corporation is paid by the banks and is not to be passed on to depositors.
- DICGC last revised the deposit insurance cover to ₹5 lakh in Feb, 2020, raising it from ₹ 1 lakh since 1993.
Deposit Insurance- Coverage:
- Deposit insurance covers all deposits such as savings, fixed, current, recurring deposits, etc. in all commercial banks, functioning in India.
- Deposits in State, Central and Primary cooperative banks, functioning in States/Union Territories are also covered.