Govt Plans to Raise Bank Deposit Insurance Limit to Strengthen Customer Protection!
The Indian government is considering increasing the bank deposit insurance limit, currently set at ₹5 lakh, to provide greater security for depositors. This move follows concerns over recent banking crises, including restrictions on New India Co-operative Bank.
Bharat Good Times 
The Indian government is actively considering increasing the bank deposit insurance limit, currently set at ₹5 lakh, to enhance depositor protection. This move comes in response to recent supervisory concerns leading to the Reserve Bank of India's (RBI) suspension of withdrawals from New India Co-operative Bank. Financial Services Secretary M. Nagaraju confirmed the deliberations, stating that an official announcement will follow upon finalization.
The deposit insurance, managed by the Deposit Insurance and Credit Guarantee Corporation (DICGC), was last revised in 2020, increasing from ₹1 lakh to ₹5 lakh, following financial irregularities at Punjab and Maharashtra Co-operative Bank. This insurance covers each depositor's principal and interest amounts, ensuring compensation up to the specified limit in case of bank failure.
In light of India's economic growth and financial sector formalization, experts, including RBI Deputy Governor M. Rajeshwar Rao, have advocated for periodic revisions of deposit insurance coverage. Such adjustments aim to align with the increasing deposit base and provide adequate protection to depositors.
