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Deposit insurance cover is applicable to deposits in co-op banks

The government has suggested DICGC and Reserve Bank of India (RBI) to adopt risk-based deposit insurance premium structure

August 16, 2012 4:38 IST | India Infoline News Service
The deposit insurance coverage is applicable to all eligible deposits in co-operative banks, Finance Minister P Chidambaram informed Rajya Sabha.

According to current norms of Deposit Insurance and Credit Guarantee Corporation (DICGC), a 100% subsidiary of the Reserve Bank of India (RBI), a maximum of Rs. 1 lakh is paid to a depositor if a bank becomes insolvent.

“In terms of the provisions of the Deposit Insurance and Credit Guarantee Corporation Act, the deposit insurance coverage is also applicable to the eligible deposits held in all eligible co-operative banks,” Mr Chidambaram said in a written reply.

The government has suggested DICGC and Reserve Bank of India (RBI) to adopt risk-based deposit insurance premium structure. This will be prior to the DICGC proposal for increasing insurance coverage limit from Rs. 1 lakh to Rs. 2 lakh being approved, Mr Chidambaram added.

"DICGC has sent a proposal to increase the deposit insurance coverage limit from the existing Rs. 1 lakh to Rs. 2 lakh for approval of the government. The proposal was examined and to rationalise the deposit insurance premium structure, the government has suggested to the DICGC and the RBI to adopt to Risk-Based Deposit Insurance Premium Structure, before the proposal of the DICGC is considered for approval," Mr Chidambaram said.

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