INSUBCONTINENT EXCLUSIVE:
The crisis at PMC Bank has brought to the fore the need to increase deposit insurance coverage.Mumbai: Reserve Bank deputy governor B P
Kanungo said on Thursday said the five-fold hike in deposit insurance to Rs 5 lakh will not have much impact on bank balance
sheets.Following the failure of a number of cooperative banks, with the city-based PMC Bank being the latest and largest last year, the
budget had permitted the Deposit Insurance and Credit Guarantee Corporation (DICGC) to raise deposit insurance coverage to Rs 5 lakh from Rs
1 lakh."The revision in deposit insurance will not impact banks' balance sheets much," Mr Kanungo told reporters during the post-policy
conference.The crisis at the Punjab - Maharashtra Cooperative (PMC) Bank has brought to the fore the need to increase deposit insurance
coverage.The DICGC, a wholly-owned subsidiary of the Reserve Bank of India, provides insurance cover on bank deposits.DICGC currently
provides Rs 1 lakh insurance to a depositor regardless of the deposit amount, in case the lender fails or gets liquidated.The corporation
insured each bank depositor up to a maximum of Rs 1 lakh for both principal and interest amount held by them as on the date of
liquidation/cancellation of a bank's licence or the date on which the scheme of amalgamation/merger comes into force.
