By Admin 
In this era of scams in banks and their drowning, now the question has become big whether your life earnings are safe in the bank? Crores of people in India deposit their hard -earned money as savings and fixed deposits in banks.
But what if that bank suddenly becomes bankrupt? In such a situation, how much is your deposits security? The answer to this question is to date, only up to 5 lakhs. However, now the government and the Reserve Bank of India (RBI) are considering increasing this limit.
What is deposit insurance and how does it work?
Deposit Insurance and Credit Guarantee Corporation (DICGC), which is a subsidiary institution of RBI, insures the zodiac signs deposited in all commercial and cooperative banks of the country. This means that if a bank becomes bankrupt, then customers deposited in that bank get a maximum of 5 lakh (principal + interest) insurance.
This limit is a bank per bank for a person, even if your amount is in different branches of the bank. But if your amount is in different banks, then insurance is applied separately for each bank.
Why can the limit of deposit insurance be increased?
According to the report of Business Standard, RBI is now considering increasing this insurance limit above 5 lakhs. This can be decided soon. Earlier in the budget session, Finance Minister Nirmala Sitharaman also said that the decision to increase the insurance limit will be taken by looking at the current status of DICGC and banking system. A member in Parliament had also proposed to increase it to 50 lakhs.
Why did this question arise from recent bank crises?
PMC Bank Case (2019)
When RBI imposed restrictions on Punjab and Maharashtra Cooperative Bank (PMC), thousands of account holders were in trouble. The deposit of some people was in lakhs, but they got insurance protection up to only 5 lakhs.
Yes bank crisis
Although the RBI and the government together took over the YES Bank, if this effort was not successful, then the capital of millions of account holders could have been in danger.
Plight of cooperative banks
Incidents of the closure of many small banks like Lakshmi Cooperative Bank came to light, where the account holders had to wait for years to get their deposit.
Why is there an increase in insurance limit?
5 lakhs are not enough in this era of inflation. Today, the fixed deposit of a general middle class family is 10 lakh or more. The limit of 5 lakhs is neither relaxed nor security. The elderly and villagers need more security. People from villages and small towns, especially the elderly, are completely dependent on the bank. The amount deposited for them is the capital of life. Apart from this, this will strengthen the trust of customers. If the government increases the limit of deposit insurance, then it will strengthen the trust of the common people towards the banking system.
Also read: India will be expensive to send money from America? Trump’s 3.5 percent tax scheme increased the concern of Indians