RBI Advocates for Higher Deposit Insurance Limit

On 19th August, 2024, Reserve Bank of India(RBI) Deputy Governor M Rajeshwar Rao suggested an increase in the deposit insurance coverage limit, currently set at Rs 5 lakh, may be necessary to keep pace with economic growth and inflation.

During his valedictory address at the IADI Asia-Pacific Regional Committee International Conference 2024, hosted by the Deposit Insurance and Credit Guarantee Corporation (DICGC), Rao emphasized the need for adequate insurance coverage for customer deposits.
Rao noted that as of March 31, 2024, 97.8% of accounts in the Indian banking system are fully protected, surpassing the international benchmark of 80%.
He highlighted that while current insurance coverage levels are satisfactory, future challenges may necessitate an upward revision of the coverage limit due to factors like increasing deposit values, inflation, and rising income levels.
Currently, India maintains a uniform deposit insurance coverage of Rs 5 lakh per depositor per insured bank, but Rao suggested that periodic adjustments may be required to address evolving economic conditions.