Bank deposit insurance cover hiked: Finance Minister Nirmala Sitharaman on February 1, 2020, announced a hike in insurance cover for bank depositors and said depositors' money is absolutely safe. Deposit Insurance and Credit Guarantee Corporation has been permitted to increase deposit insurance coverage to Rs 5 lakh per depositor from Rs 1 lakh.
Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the Reserve Bank of India, provides insurance cover on bank deposits.
"Robust mechanism in place to monitor the health of banks, depositors' money is absolutely safe," said Finance Minister Nirmala Sitharaman said her Budget speech in Lok Sabha.
At present, bank depositors get an insurance cover of Rs 1 lakh on their amount by the Deposit Insurance and Credit Guarantee Corporation.This move comes after the government and RBI were widely criticised over their handling of the closure PMC bank in September last year, leaving thousands of people helpless and unable to withdraw their own money.
Under the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, every depositor in a bank is insured up to a maximum of Rs 1 lakh including the principal and interest amount. The limit is the aggregate of all bank branches of the same bank but if you have deposits with more than one bank, the deposit insurance limit will apply separately to the deposits in each bank. The limit of Rs 1 lakh was set in May 1993.
What kind of deposit accounts are covered under Bank Deposit Insurance?
All types of deposits, be it fixed, saving, recurring, etc. are covered under this scheme. Except
- Deposits by Governments – State/Central/Foreign
- Interbank deposits
- Deposits of State land Development banks with State Cooperative Banks
- Any amount due on account of and deposit Received outside India
- Any amount specifically exempted by DICGC with prior approval of RBI