The RBI releases the Financial Stability Report (FSR) semi-annually. Among the RBI’s crucial measures safeguarding bank customers, deposit insurance stands out as a vital shield, securing small depositors from potential losses due to bank failures for up to ₹5 lakh. Here are four charts that depict the changing landscape in deposit insurance from its latest report.
The ratio of insured deposits to the total assessable deposits in the banking system has been declining due to the prevailing higher interest rate environment, prompting customers to place larger deposit amounts (above ₹ 5 lakh) with their respective banks.
The insured deposits ratio was higher for cooperative banks than other commercial banks owing to the difference in the average deposit size.
The Deposit Insurance Fund, managed by the Deposit Insurance and Credit Guarantee Corporation (DICGC), is primarily financed through premiums paid by the insured banks, recoveries from resolved claims, and net investment income.
The number of insured accounts has remained consistently close to 98% over the past two years.