• search
For Quick Alerts
For Daily Alerts

Explained: The Budget proposal to increase the insurance cover on bank deposits


New Delhi, Feb 04: In the Union Budget that was tabled on Saturday, the government proposed to increase the insurance cover on bank deposits from Rs 1 lakh to Rs 5 lakh.

This was done with the aim of instilling more trust of the public in the banking system.

Explained: The Budget proposal to increase the insurance cover on bank deposits

Why was the insurance cover hiked:

In September 2019, the Reserve Bank of India had slapped curbs on the Punjab and Maharashtra Cooperative Bank and also appointed an administrator, while superseding the board of directors.

Explainer: When a public health emergency declared by WHO

This led to panic among the depositors. The customers rushed to the banks but were unable to withdraw more than Rs 1,000, which led to protests.

What is the DICGC:

The Deposit Insurance and Credit Guarantee Corporation is a subsidiary of the RBI. It gives insurance cover of up to Rs 1 lakh on deposits in banks. Now the banks will ensure deposits up to Rs 5 lakh.

Explainer: Why state government resolution against citizenship law has no legal sanctity

How does it benefit depositors:

When the bank collapses, depositors will get insurance of Rs 5 lakh from the corporation. However it must be noted that irrespective of the amount deposited, a customer would be entitled only for Rs 5 lakh insurance cover.

For Daily Alerts
Get Instant News Updates
Notification Settings X
Time Settings
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Oneindia sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Oneindia website. However, you can change your cookie settings at any time. Learn more