After hike in limit, over 50% of bank deposits now insured: Economic survey

Since the increase in limit of deposit insurance to Rs 5 lakh, the number of insured accounts stands at 98% while the global benchmark is 80%, Economic Survey highlighted.

In terms of amount, the total insured deposits (Rs 76.2 lakh crore) as at end-March 2021 constituted 50.9 per cent (up from about 30 per cent under Rs 1 lakh cover) of the total assessable deposits (Rs 149.7 lakh crore) as against the international benchmark of 20-30 per cent, stated the survey.

The deposit insurance premium is compulsory for all insured banks and is paid by banks to DICGC and is not recovered from the depositors.

The deposit insurance coverage that began with Rs 1500 in 1961 has been raised gradually to Rs 1 lakh in 1993 but had been static thereafter till 2020. After the announcement in the Union budget 2020-21, the deposit insurance cover was increased from `1 lakh to Rs 5 lakh per depositor per bank.

The biggest share of coverage is for RRBs at 84% while for foreign banks it is 9% of insured deposits. For cooperative banks it is 70%. SBI has 59% of the deposits insured while public sector banks have 55% of the deposits insured. The figure is 40% for private banks.

A cumulative amount of Rs 5,763 crores has been paid towards claims since the inception of deposit insurance (Rs 296 crore in respect of 27 commercial banks and Rs 5,467 crores in respect of 365 co-operative banks), the survey said.