The Delhi High Court has asked the Reserve Bank of India to inform it what kind of protection is available to customers with deposits of over Rs 1 lakh in case a bank fails.
“Under the law, what protection is available? Where is it? What is the protection available to the amounts deposited in the bank account? It is a matter of public importance,” a bench comprising Chief Justice Rajendra Menon and Justice V K Rao asked and directed the Centre and the Deposit Insurance and Credit Guarantee Corporation (DICGC) to file affidavits in answer to the court’s query.
The court was hearing a PIL that claimed that DICGC provides a maximum insurance cover of Rs 1 lakh per customer, irrespective of the amount of deposit, including savings, fixed, current and recurring.
The DICGC, a subsidiary of the RBI, was established in 1961 to provide insurance on deposits and guarantee credit facilities. The HC was hearing a PIL challenging the corporation’s decision to provide maximum insurance cover of only Rs 1 lakh irrespective of the amount deposited. The PIL claims that as per information received under the RTI Act, there are 165 million accounts in the country with deposits of over Rs 1 lakh but there has been no revision of the insurance cover in the last 25 years.
The Centre and DICGC told the bench the Rs 1 lakh cover was only immediate relief and did not constitute the final relief in case a bank failed. It was reported in August that the Centre had turned down suggestions to raise the insurance cover on bank deposits to Rs 15 lakh from the current Rs 1 lakh.