After deciding that the deposit insurance cover needs to be raised, The Reserve Bank of India (RBI) has instructed its subsidiary Deposit Insurance and Credit Guarantee Corporation (DICGC) to create a risk-based system for collecting premiums from banks to cover the deposit insurance of customers.
According to sources, the central board of the RBI, which met in Chandigarh on October 11, had a detailed deliberation on the proposal to hike the deposit.
Concerns over banks’ deposit insurance cover have increased of late after the recent crisis at the Punjab and Maharashtra Co-operative Bank, or PMC Bank. Many scam-hit Punjab and Maharashtra Co-operative (PMC) Bank account holders were able to withdraw Rs 40,000 from the bank after the RBI hiked the withdrawal limit on October 14.
The fate of the people who have their entire life savings in the bank lies in a limbo. Quite a few people have also died of late due to the scam.
HDFC bank customers too panicked after an image was circulated on social media showing an HDFC passbook carrying a stamp explaining the limited assurance given by deposit insurance scheme to the depositor in the event of a bank failure.
The stamp explained the rules governing deposit insurance cover upto Rs 1 lakh incase of bank liquidation. Later, HDFC Bank allayed the concerns of depositors and came out with a clarification that according to the RBI regulations issued in June 2017, all banks including co-operative banks have to mandatorily inform their depositors about the rules of the deposit insurance cover under the Deposit Insurance and Credit Guarantee Corporation (DICGC), which is Rs. 1 lakh.
But now with the RBI considering raising the insurance limit, there is some hope for depositors, who wish to park their money in banks.
