Call to raise insured amount on bank deposits to ₹10 lakh

Thiruvananthapuram, December 7

The All India Reserve Bank Employees Association (AIRBEA) has requested the intervention of the Governor for revising the insured amount on bank deposits from ₹1 lakh to ₹10 lakh.

The current limit of deposit insurance was fixed as far back as 1993, a letter addressed to the Governor from Samir Ghosh, General Secretary, AIRBEA, said.

Types of deposits

The insured amount covers all types of deposits held by a customer, and was fixed in 1993. This is too meagre an amount going by the phenomenal increase in bank deposits and number of depositors. An upward revision has become relevant given the general air of apprehension and consequential uncertainty among the public after they have been persuaded to keep their savings in banks.

“Taking all relevant aspects into consideration, we propose that the insured amount be raised to ₹10 lakh, to give a sense of security among the depositors,” the letter said.

AIRBEA had earlier demanded that the Deposit Insurance and Credit Guarantee Corporation that guaranteers depositor money function as a subsidiary of RBI and continue to function as such.

It also sought to bring the Governor’s attention to the Finance Minister’s attempts to allay apprehensions over the proposed Financial Resolution and Deposit Insurance (FRDI) Bill and the ‘bail-in’ process.

In the ‘bail-in’ process, banks issue securities in lieu of the money deposited. In the past, ‘bail-in’ efforts attempted elsewhere have largely worked against depositors.

The Finance Minister has gone on record saying that “the drafting process of the Bill is still under way and it could be reviewed as part of the regular process for new legislations”. This provides a window of opportunity for all concerned to put informed suggestions to improve upon the Bill to ensure safety and security of depositors, said Ghosh.

Published on December 07, 2017


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