The Government of India is considering increasing the insurance security limit from ₹ 5 lakh to ₹ 10 lakh on bank deposit. If this proposal passes, this will be the first time since February 2020 when the limit of deposit insurance will be changed.
💼 Ministry of Finance and Agencies are preparing
According to sources, senior officials of the Ministry of Finance and the concerned agencies are working on the implementation process to increase the insurance limit. A final decision can be taken soon. This step will strengthen the sense of trust and security in account holders across the country.
🏦 DICGC will be handed over increased insurance responsibility
Deposit Insurance and Credit Guarantee Corporation (DICGC), which is a fully owned organization of the Reserve Bank of India (RBI), provides insurance cover on the accounts of all commercial banks, regional rural banks, and cooperative banks in India.
At present, in the event of a bank drowning or going into Moratorium (control), the account holders get safe amount of up to ₹ 5 lakh. After the proposed change, this limit can be increased to ₹ 10 lakh.
📜 History of Insurance limit: 1962 till now
Deposit insurance began in 1962 with a limit of only ₹ 1,500. It was extended from time to time:
Year Insurance limit 1962 ₹ 1,500 1976 ₹ 20,000 1980 ₹ 30,000 1993 ₹ 1,00,000 2020 ₹ 5,00,000 proposed ₹ 10,00,000
In 2020, a limit of ₹ 5 lakh was implemented after the PMC bank crisis. Now the need to increase it again is being felt.
⏱️ In case of drowning bank, insured amount is received in 90 days
According to the existing DICGC rules, if a bank sinks or is put into the Moaretorium by the government, the account holders get the insurance amount within 90 days. The process is as follows:
The bank has to send a claim to DICGC within 45 days.
DICGC releases payment within the next 45 days.
💰 Which accounts get insurance cover?
Deposit insurance covers the following accounts:
Savings account
Fixed deposit
Recurring deposit
Current account
Cooperative bank accounts
👉 Insurance limit is a bank per account holder, which includes both interest and principal. That is, if you have many accounts in the same bank, then everyone will get a cover up to ₹ 5 lakh (or proposed ₹ 10 lakh).
📈 Why is it important to increase insurance limit?
Experts believe that:
There will be increasing trust in banking among small and rural account holders
More people will join the formal banking system
Deposit zodiac signs may increase
There will be relief in crisis in cooperative banks and private banks
🏛️ Budget or financial reforms can be announced
The Ministry of Finance will soon take a final decision after discussing with representatives of RBI, DICGC and banking sector. It is expected that this announcement can be part of an economic reform package in or before the upcoming general budget.