Chalasani Raghavendra Rao, Chairman, Visakhapatnam Cooperative Bank has objected to some points of Sahakar Bharati letter written to the Union Finance Minister on the issue of risk-based premiums for bank deposits.
In a mail to Indian Cooperative, Rao says it’s surprising to see that Sahakar Bharti is proposing risk-based premiums for bank deposits. The idea of risk-based premiums was denied by the NAFCUB leadership earlier. If we go through the DICGC annual report they are charging premiums for 100% deposits and coverage is limiting to one lakh only, he added.
“27 years ago what were the bank deposits and compare it with that of now to know the difference. Also factor in the inflation rate in these 27 years”, Rao said. He also lamented that whenever PSU banks are in trouble, government infuses taxpayers’ money.
DICGC is not increasing insurance limit but paying thousands of crores as income tax to the government, he added. In my opinion we shall not suggest or support for risk based premiums, Rao said.
“Another important issue is discrimination in income tax. Cooperative banks are paying 34.94% as tax while private banks are paying only 25.17%. I feel we should pressurise govt for level playing field for cooperative banks and full insurance coverage for deposits since DICGC is collecting premiums for total deposits. Kindly look in to it and do the needful in the interest of cooperative movement”, he wrote to the cooperative portal.
It bears recall that in a letter written earlier to Union Finance Minister Sahakar Bharati had stated that banks be permitted to obtain over and above the proposed enhanced limits, additional Deposit Insurance Limits for their Depositors viz. individuals and institutions by payment of additional premium.
Sahakar Bharati said “To protect the interests of depositors of such Banks that fail on account of frauds DICGC Ltd should create a separate Reserve, it demands. With notice of minimum 3 years, DICGC Ltd should start charging Risk Based Premium to all banks, irrespective of their nature of ownership, the letter tells the FM. This will enable Depositors to pick and choose bank/s of their choice for placement of Deposits”, it clarifies.
Arguing the further the letter of Sahakar Bharati read that considering the profile of the Indian Banking Sector, it is estimated that 75% of the banks (PSUs, systematically important Banks and most Foreign Banks) are never likely to fail and hence, even if, the Deposit Insurance Limits are raised there is no case for enhancing the present Deposit Insurance Premium.