Deposit insurance to stay unchanged at Rs 1 lakh
Although there had been a preliminary round of discussion by officials in the finance ministry to raise the insurance cover to Rs 2 lakh, sources said that it is not likely to happen in the near future.business Updated: Oct 19, 2008 20:54 IST
Insurance cover for your bank deposits may not be increased from Rs 1 lakh to Rs 2 lakh as of now. Although there had been a preliminary round of discussion by officials in the finance ministry to raise the insurance cover to Rs 2 lakh, sources said that it is not likely to happen in the near future.
Bank deposits are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC). An amount of Rs 1 lakh is paid to a depositor in case the bank fails. The amount includes the interest earned on the deposit money and is paid if the deposit amount is more than Rs 1 lakh.
The DICGC Act empowers the corporation to raise the limit of insurance cover from Rs 1 lakh to a higher limit with the prior approval of the Central government. However, DICGC officials said that there has been no communiqué from the ministry on increasing the cover nor was a possibility discussed in the last meeting of DICGC in September.
Following the global financial turmoil, several governments across the world have increased the insurance cover for their bank deposits to boost confidence among savers.
Till some time, a joint account by two people, say Ramesh and Sushila in Bank ABC and another joint account with the names — Sushila and Ramesh in Bank XYZ would be considered as a single account. In case both the banks failed, the two would get only Rs 1 lakh. However, these rules have been amended recently such that the two joint accounts will be treated as two separate accounts. Both the persons will get Rs 1 lakh each if the two banks fail.