As per the data released by the Economic Survey 2021-22, 59% of State Bank of India (SBI) deposits are fully insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC), vis-a-vis their total bank deposits. In case of other public sector banks, 55% of the bank deposits are fully insured vis-a-vis their total bank deposits.
“Bank-group wise, the percentage of insured deposits vis-à-vis total deposits is 84 per cent for RRBs, 70 per cent for cooperative banks, 59 per cent for SBI, 55 per cent for PSBs, 40 per cent for private sector banks and 9 per cent for foreign banks” stated the Economic Survey.
RRB stands for regional rural banks and PSB stands for public sector banks.
As per the current laws, bank deposits are covered up to Rs 5 lakh per depositor per bank under the DICGC Act, 1961. The limit was raised from Rs 1 lakh to Rs 5 lakh in the Union Budget 2020. Under the current regulations, the Deposit Insurance and Credit Guarantee Corporation (DICGC) is liable to pay the insured deposit amount to depositors of an insured bank. Such liability may arise when an insured bank undergoes: (i) liquidation (sale of all assets on closing down of the bank) (ii) reconstruction or any other arrangement under a scheme, or (iii) merger or acquisition by another bank.
Bank deposit insurance covers all commercial banks, including payment banks, small finance banks, RRBs, Foreign Bank branches in India, Local Area Banks and Co-operative Banks in all States and Union Territories.
The deposit insurance coverage that began with Rs 1,500 in 1961 was increased over the years to Rs 1 lakh in 1993 but had been static thereafter till 2020.
