Bank Rules: If you deposit any money in the bank, then currently you get insurance protection on deposits up to Rs 5 lakh. Customers currently get this insurance cover absolutely free. But it is possible that you may have to pay some premium for this soon. Read this news…
Bank Rules: If you deposit money in a bank across the country, then your amount up to Rs 5 lakh remains safe because you get insurance cover on this amount. Now if your bank sinks or closes due to any problem, then you get back the amount up to Rs 5 lakh deposited in your bank account. Currently, this facility of insurance on deposits in banks is available for free. But now it is being considered to charge risk based premium on it.
Reserve Bank of India (RBI) Deputy Governor Swaminathan J said on Wednesday that a risk related premium system can be considered for deposit insurance. This will ensure more contribution to the fund of high risk institutions (banks) while insuring them.
What will be the risk related premium?
The risk related premium that Deputy Governor Swaminathan J is talking about. Its direct meaning is that a small premium can be charged while insuring the customers of banks which have a higher risk of sinking. This will depend on their risk level. However, it is not clear yet whether when this premium is collected, its burden will also fall on the customers.
At present, the insurance protection on deposits in the country is provided by ‘Deposit Insurance and Credit Guarantee Corporation’ (DICGC). It works under the rules of the Reserve Bank of India. DICGC recently organized the International Deposit Insurer Union’s Asia Pacific region’s international conference. In this conference, Deputy Governor Swaminathan J talked about considering risk related premium.
Regulators’ work is becoming difficult
In this conference, Swaminathan said that as the financial sector is becoming more digital, there is a need to strengthen the monitoring system of deposit insurers. For this, regulators and observers need to work together. This includes new risks related to digital payments, cyber security and fintech.
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