The central government can increase the insurance cover from Rs 5 lakh to Rs 8-12 lakh for bank deposits by the end of this month. Sources aware of the case have given this information. Financial Services Secretary M Nagaraju said in a conversation with reporters after the budget that the government is considering increasing the limit on deposit insurance.
The increase in bank deposit insurance cover has occurred at a time when the Reserve Bank has faced regulatory action on a cooperative bank (New India Co-operative Bank). There has been a scam of Rs 122 crore in this bank and due to this action has been taken against its general manager and another accused. Both the accused are currently in custody till 21 February.
Cooperative bank has been banned from giving new loans and withdrawal has also been banned. Insurance facility on bank deposits is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC). Deposit Insurance and Credit Guarantee Corporation is a full -fledged subsidiary of the Reserve Bank, which deals with deposit insurance of commercial banks, regional rural banks, local area banks and cooperative banks.
What is deposit insurance?
Deposit insurance is a kind of cover that defends bank depositors in such a situation when banks are not able to pay this loan. This insurance cover includes all types of deposits, saving, fixed, current, racked etc. However, it does not include the cover of deposits of foreign, central or state governments. Currently, the deployment gets insurance cover on deposits of up to 5 lakhs.