The Union Government is considering increasing the deposit insurance limit beyond Rs 5 lakh, said M Nagaraju, Secretary of the Department of Financial Services. While no decision has been made, the proposal is under review, media reports say.
India introduced deposit insurance in 1962, following the U.S., to protect depositors during banking crises. The Deposit Insurance and Credit Guarantee Corporation (DICGC) currently insures deposits up to Rs 5 lakh, raised from Rs 1 lakh in 2020.
Nagaraju declined to comment on the crisis at New India Cooperative Bank, whose Board was superseded by the RBI due to governance issues. The RBI also restricted its operations, causing panic among depositors in Maharashtra and Gujarat. Established in 1999, the bank now faces one of its biggest challenges, with depositors fearing for their savings.
