Is Government Considering Raising Limit UPTO 50 Lakh Rupees for Deposit Insurance to Protect the Interests of Depositors Know Nirmala Sitharaman Response

Deposit Insurance Limit Hike: Is the government considering increasing the deposit insurance limit in banks keeping in mind the interests of small investors and bank account holders. Is the government going to increase the deposit insurance limit from Rs 5 lakh to Rs 50 lakh? Finance Minister Nirmala Sitharaman has asked this question during the Question Hour in the Lok Sabha.

Lok Sabha MP Suresh Kumar Shetkar and K. Sudhakar questioned the Finance Minister about the increase in the deposit insurance limit during the Question Hour whether the government was considering to increase this limit. The Finance Minister, while answering this question, said, under Section 16 (1) of the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, deposits of up to Rs 5 lakh are available on depositors of all depositors, including saving, fixed, current and racning in banks, which used to get Rs 1 lakh earlier. It was decided to increase this limit from 4 February 2020.

The Finance Minister said, the Deposit Insurance and Credit Guarantee Corporation can periodically increase the deposit insurance cover after taking the approval of the central government, keeping in mind its financial status and the interest of the banking system of the entire country. Nirmala Sitharaman said, all commercial banks, small finance banks, payment banks, regional rural banks and local sector banks and all cooperative banks, State Cooperative Banks and District Central Cooperative Banks come under deposit deposit insurance cover.

In the second week of February this year, the Reserve Bank of India had decided to impose several restrictions on the functioning of the new India co-operative bank after getting irregularities. After this decision of RBI, deposits were banned on the withdrawal of their hard earned money deposited in accounts. Since then, the demand to increase the deposit insurance limit has intensified. In the budget, there was also a demand to give insurance cover on deposits of more than Rs 5 lakh to give safety shield to the hard earned money of bank deposits. Although the bank customers’ savings account, recurring deposits or fixed deposits, may be deposited in the bank over Rs 5 lakh, but if the bank drowns, the insurance cover is available on a deposit of up to Rs 5 lakh only.

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