Protecting Depositors: Demand for Higher Bank Deposit (DICGC) Insurance Cover in India

[TechnoFinoTechnoFino is verified member.]

Hey TFCians,
There is a very important issue we should raise. Recently, after a lot of pressure, the government decided to cut GST rates and simplify processes for fellow Indians, a much-needed step that will ultimately increase consumption and boost the economy. Although we can’t say anything for sure, there are rumors that the government is planning to implement a 40% GST slab. Anyway, these are just rumors, we’ll have to wait for the actual picture.

But there is one important issue the government has been overlooking for a very long time.
I’m talking about the DICGC insurance cover on our bank deposits.

The government increased the cover from ₹1 lakh to ₹5 lakh in 2020, but compared to today’s scenario, even a child can understand that ₹5 lakh is far too low. There was news that the government might hike the DICGC cover to ₹12 lakh in the current financial year, but even that is not going to be enough.

In the US, the FDIC offers deposit insurance of $250,000 which equals about ₹2.18 crore INR at today’s exchange rate.
In the UK, the FSCS covers deposits up to £85,000 per financial institution, which equals about ₹1.006 crore INR today.



So, what’s stopping India and its government from offering a decent amount of cover to its citizens? At the very least, we need ₹1 crore INR worth of insurance per RBI-regulated bank.
People should come forward and raise this issue, as it is extremely important for protecting the interests of banking consumers and ensuring the financial security of all Indian citizens.

 

[Half Human]

Hey TFCians,
There is a very important issue we should raise. Recently, after a lot of pressure, the government decided to cut GST rates and simplify processes for fellow Indians, a much-needed step that will ultimately increase consumption and boost the economy. Although we can’t say anything for sure, there are rumors that the government is planning to implement a 40% GST slab. Anyway, these are just rumors, we’ll have to wait for the actual picture.

But there is one important issue the government has been overlooking for a very long time.
I’m talking about the DICGC insurance cover on our bank deposits.

The government increased the cover from ₹1 lakh to ₹5 lakh in 2020, but compared to today’s scenario, even a child can understand that ₹5 lakh is far too low. There was news that the government might hike the DICGC cover to ₹12 lakh in the current financial year, but even that is not going to be enough.

In the US, the FDIC offers deposit insurance of $250,000 which equals about ₹2.18 crore INR at today’s exchange rate.
In the UK, the FSCS covers deposits up to £85,000 per financial institution, which equals about ₹1.006 crore INR today.

View attachment 106987

So, what’s stopping India and its government from offering a decent amount of cover to its citizens? At the very least, we need ₹1 crore INR worth of insurance per RBI-regulated bank.
People should come forward and raise this issue, as it is extremely important for protecting the interests of banking consumers and ensuring the financial security of all Indian citizens.

A higher insurance will increase the inflow to SFB leading to higher lending rate and higher defaults and NPA's in the P&L of these SFB's leading to some turmoil in the banking system creating ripples even till the foot of the Magnum's.
This is the reason why this consideration is kept on hold for a while

 

[hender]

Hey TFCians,
There is a very important issue we should raise. Recently, after a lot of pressure, the government decided to cut GST rates and simplify processes for fellow Indians, a much-needed step that will ultimately increase consumption and boost the economy. Although we can’t say anything for sure, there are rumors that the government is planning to implement a 40% GST slab. Anyway, these are just rumors, we’ll have to wait for the actual picture.

But there is one important issue the government has been overlooking for a very long time.
I’m talking about the DICGC insurance cover on our bank deposits.

The government increased the cover from ₹1 lakh to ₹5 lakh in 2020, but compared to today’s scenario, even a child can understand that ₹5 lakh is far too low. There was news that the government might hike the DICGC cover to ₹12 lakh in the current financial year, but even that is not going to be enough.

In the US, the FDIC offers deposit insurance of $250,000 which equals about ₹2.18 crore INR at today’s exchange rate.
In the UK, the FSCS covers deposits up to £85,000 per financial institution, which equals about ₹1.006 crore INR today.

View attachment 106987

So, what’s stopping India and its government from offering a decent amount of cover to its citizens? At the very least, we need ₹1 crore INR worth of insurance per RBI-regulated bank.
People should come forward and raise this issue, as it is extremely important for protecting the interests of banking consumers and ensuring the financial security of all Indian citizens.

+1,

Govt Owned bank 🏦 (PSU banks) - Must have inbuilt protection cover equal to the same amount being kept in FD or Saving.
It may be of 10 lakhs or 10 crores.

(For Pvt/Others a max of 5-10% Cut in total money kept vs insurance).
Just to motivate people to keep money in Government banks.

Why to unnecessary load/utilise Bank bandwidth and resources, just for distribution of 5 lakh per Bank dicgc cover. If one or two Bank are sufficient for a person's need.

 

[ccdc]

govt can put any limit...its upto the banks to avail this service or not (or upto how much extent to avail this service)....while taking deposits banks advertise that our deposits are insured upto 5L.....that's a selling point for banks...banks have to pay a premium every year to get their deposits insured upto 5L....well if govt increases limit to 1cr....and assuming that banks go ahead and insure evey PAN for 1cr....premium will go up 20x (safe to assume)...where will the 20x premium come from....obv deposit rates will go down or some other charges/fees will go up drastically......bank will not reduce profits to cover this increase....maangne ko toh hum sab kuch maang sakte hai...thoda dimag ka bhi use karlo.....

example

As per HDFC Bank Financials, the Bank paid 2803 cr (excl gst) as dicgc premium in FY 25 for insuring 5L/PAN....lets say HDFC goes for the option of insuring 1cr/PAN....since insurance amt has increased 20x...premium for that insurance will also increase 20x....imagine HDFC Bank having to cough up additional 50000 cr (lets assume dicgc will give some discount to hdfc) for insuring 1cr/PAN....HDFC Bank PAT for FY 25 is 67k cr.....where do you think HDFC Bank will cough up this 50000 cr...best answer wins a prize from OP here demanding 1cr/PAN.