The Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the Reserve Bank of India, may revamp the country’s 50-year-old deposit insurance scheme by the end of 2019, according to a report by Business Standard.
“The DICGC board has kick-started the process and will submit its report to the finance ministry. It will be taken up at the next central bank board meeting as and when it is scheduled. Hopefully, it (the DICGC report) should be ready by then,” a source told the newspaper.
The move comes after a recent incident at the Punjab and Maharashtra Co-operative Bank (PMC), where depositors were in chaos after RBI imposed curbs on the bank as well as the withdrawal limit.
According to the report, the DICGC would examine the feasibility of a shift from the current flat-premium model of 10 paise for every Rs 100 of deposits held by banks to the insurer. The revised scheme would include two categories of depositors: personal and institutional. The former will cover retail and small businesses while the latter will take care of large corporate depositors, trusts, and government agencies. The body will also increase the Rs 1 lakh cap for every account holder in the case of liquidation of the bank.
The deposit insurance scheme was last revised on May 1, 1993, after the collapse of the Bank of Karad, in the wake of the securities scandal of 1991.