Reportedly after several account holders suffered due to the PMC bank crisis, the government is seriously considering hiking the insurance cover on deposits with banks. Meanwhile the current limit is Rs 1 lakh and hence this means depending on the amount a person has in their bank account, they are entitled to a maximum of Rs 1 lakh as the sum insured, if the bank were to go bust and this limit was fixed in 1993. Apparently that time too, there was a bank going insolvent in maharashtra, the bank of Karad.
Furthermore according to a report, the proposal now being considered by the government is to lift this sum insured to Rs 2 lakh, while there are others who feel this could be even Rs 3 lakh. Meanwhile those suggesting the higher level of Rs 3 lakh are relying on the practice being followed in many countries of fixing this amount as twice that of the per capita GDP and the last revealed figure for the country’s per capita GDP is Rs 1,42,719.
Perhaps the government has to bring in an amendment to the Financial Resolution and Deposit Insurance (FRDI) law to enable this increase in the deposit cover amount and the government need not fiddle with this deposit insurance cover. Apparently there is an 80:20 rule followed there. 80% of the depositors in terms of numbers hold only around 20% of the total deposits in a bank in terms of the value of the deposits held. 20% hold the remaining 80%. Perhaps bank OF INDIA' target='_blank' title='rbi-Latest Updates, Photos, Videos are a click away, CLICK NOW'>rbi says 91% of depositors in india accounting for nearly 28% of the deposits in all the banks are covered under the deposit insurance scheme.
