In response to a query raised by a Lok Sabha MP regarding the increase of the deposit insurance limit from Rs 5 lakh to Rs 50 lakh, Union Finance Minister Nirmala Sitharaman stated that the DICGC has the authority, under Section 16(1) of the DICGC Act, to propose such an enhancement after assessing its financial position and the overall interests of the country’s banking system. However, any such proposal would require prior approval from the Central Government.
“Currently, the deposit insurance cover is set at Rs 5 lakh per depositor, applicable to savings, fixed, current, and recurring deposits across all branches of a bank in the same capacity and right. This limit was previously raised from Rs 1 lakh to Rs 5 lakh on February 4, 2020, in a move aimed at strengthening depositor protection”, she added.
The deposit insurance scheme extends coverage to commercial banks, small finance banks, payment banks, regional rural banks, and co-operative banks, including primary (urban) co-operative banks, state co-operative banks, and district central co-operative banks.
With increasing concerns over financial stability and depositor security, DICGC may consider making a suitable proposal to the government for further enhancement of the deposit insurance limit, aligning with its financial capacity and the needs of the banking sector.
