Key Points
A periodical upward revision of the deposit insurance coverage limit, currently at Rs 5, lakh, may be warranted considering multiple factors like growth in the value of deposits, inflation, and increase in income level, RBI Deputy Governor M Rajeshwar Rao has said.. Delivering the valedictory address at IADI Asia-Pacific Regional Committee International Conference 2024 hosted by Deposit Insurance and Credit Guarantee Corporation (DICGC) here last week, the Deputy Governor said it is important to ensure adequacy of insurance coverage for customer deposits...
While the scope and coverage appear satisfactory at this juncture, there are likely challenges going forward, Rao said.. "Today we count India to be amongst the fastest growing large global economies and this healthy growth rate is expected to continue in the near future..
There is also a dilemma that introduction of a RBP can render the riskier institutions more vulnerable to deposit flight and shorten the distance to failure, he said.. "However, we also need to recognise that with greater innovations in product offerings by banks newer risks which can impact deposit growth, the demand for higher coverage for deposits, Risk Based Premium would be a better option for the deposit insurer to ensure robustness of its finances and also enhance its capability to operate in changed financial milieu...
