Crime Today News
The deposit insurance cover was last increased from ₹1 lakh to ₹5 lakh with effect from February 4, 2020.
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The time may be ripe for doubling the deposit insurance cover to ₹10 lakh as the coverage limit of deposit insurance has declined to 2.5 times per capita GDP in FY25 from 2.9 times in FY24 and 3.3 times in FY20.
The deposit insurance cover was last increased from ₹1 lakh to ₹5 lakh with effect from February 4, 2020.
The decline in the coverage limit of deposit insurance to 2.5 times per capita GDP in FY25, from 2.9 times in FY24, comes even as the share of term deposits of size ‘₹1 crore and above’ rose to 45.1 per cent in March 2025 from 43.7 per cent in March 2024, according to RBI data.
Insured deposits up 7%
In terms of value, the total insured deposits increased about 7 per cent year-on-year to ₹96,74,623 crore (₹90,32,340 crore in the previous year), which was 42.6 per cent (44.2 per cent in the previous year) of the assessable deposits, per RBI’s latest annual report.
What this means is, in value terms, more than half of the bank deposits don’t have insurance cover, with the proportion of such deposits increasing to 57.4 per cent of assessable deposits in FY25 from 55.8 per cent in FY24.
It may be pertinent to mention here that the premium paid by the insured banks is computed based on their assessable deposits.
The Deposit Insurance and Credit Guarantee Corporation (DICGC) levies banks a flat rate premium of 12 paise per ₹100 of assessable deposits per annum for providing deposit insurance.
Big ticket deposits
During 2024-25, deposit insurance premium received was ₹26,764 crore, recording a y-o-y growth of 12.1 per cent, the report stated.
As on September 30, 2024, the number of fully-insured deposit accounts under the coverage limit was 286.9 crore (281.8 crore a year ago) – 97.7 per cent (97.9 per cent a year ago) of the total number of accounts, it added.
“When the insurance limit to per capita GDP ratio comes down, it means that the volumes of big ticket deposits have increased. These deposits are not covered under insurance. It is also possible that a large part of these deposits is high value, including bulk deposits. So, towards year-end, the component of bulk deposits and certificate of deposits increases. They are all counted under deposits,” said Madan Sabnavis, Chief Economist, Bank of Baroda.
He noted that while a ₹5 lakh-deposit is fully covered, a ₹50-lakh deposit is covered only to the extent of deposit insurance (₹5 lakh).
“At the end of the day, a person with ₹50 lakh deserves to have more cover than just ₹5 lakh. Today, ₹5 lakh is a small amount. There are many people, especially those who have retired, who keep their life savings in bank deposits. It is the safest option. Therefore, there is a case for increasing the deposit insurance cover,” Sabnavis said.
Taking into account the growth in deposits over the last five years, he opined that there is a case for increasing the deposit insurance cover, possibly to ₹10 lakh.
Published on June 1, 2025
This article first appeared on The Hindu Business Line
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