Union Budget 2020: Budget 2020 presented by the Finance Minister Nirmala Sitharaman on February 1, 2020, has proposed to increase deposit insurance from Rs 1 lakh to Rs 5 lakh. This move will help depositors in the banks as far safety of the money is concerned. The bank deposits are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act.
“The move to increase the deposit insurance from Rs. 1 lakh to Rs. 5 lakh by the RBI subsidiary Deposit Insurance and Credit Guarantee Corporation (DICGC) is great news for the common man. It was a necessary step to boost depositor sentiment following some bank runs. The increase in deposit insurance was overdue. This will certainly give a sense of security to depositors, especially senior citizens, who rely on their deposit interest for regular income needs in their golden years,” says Adhil Shetty, CEO, BankBazaar.com
Every deposit in a bank is insured up to a maximum of Rs 1 lakh including the principal and interest amount. The limit is the aggregate of all bank branches of the same bank but if you have deposits with more than one bank, the deposit insurance limit will apply separately to the deposits in each bank. The limit of Rs 1 lakh was set in May 1993.
Going forward, the bank deposits will be insured up to Rs 5 lakh, including principal and interest.
Of late, there has been a bank crisis in the Punjab and Maharashtra Cooperative (PMC) Bank, Mumbai, Maharashtra and lately, the restrictions were imposed by RBI on cash withdrawals by customers of Sri Gururaghavendra Sahakara Bank Niyamitha (SGRBBN), an Bengaluru, Karnataka based Urban Co-operative bank.
