Good News for Bank Customers! Government may soon Increase Bank Deposit Insurance Limit Above Rs.5 Lakh

There is a big good news for bank customers. The Government of India is planning to increase the limit of bank deposit insurance above Rs.5 Lakhs.

Right now, if a bank fails, then the bank customer gets Rs.5 Lakhs from DICGC. DICGC, or the Deposit Insurance and Credit Guarantee Corporation, is a wholly-owned subsidiary of the Reserve Bank of India (RBI). It’s responsible for insuring deposits in commercial banks and guaranteeing credit facilities.

This means that if you have deposited Rs.50 lakhs in bank and if bank fails then you will get just Rs.5 Lakhs. This has become a problem and people all across India have requested government to increase this limit.

Recently, IndusInd Bank is going through a lot of turmoil. Earlier, YES Bank failed and right now, RBI has cancelled licenses of a lot of Cooperative Banks. In view of the current situation, it has become important to raise the limit of DICGC.

Earlier, the insurance limit was only Rs. 1 Lac. DICGC increased the deposit insurance coverage limit from ₹1 lakh to ₹5 lakh per depositor per bank from 4th February 2020. In 1962, the DICGC insurance limit was only Rs.1500. Check below table to know the DICGC Limit changes.

Year	DICGC Amount
Jan 1 1962	1500
Jan 1 1968	5000
Apr 1 1970	10000
Jan 1 1976	20000
Jul 1 1980	30000
May 1 1993	100000
Feb 4 2020	500000

DICGC Insurance Limit is beneficial for customers, but it’s costly for banks. Banks need to pay a premium to provide insurance. For example: In order to provide Rs.5 Lakh DICGC insurance to customers, banks need to pay a premium of Rs.0.12. Due to this increase in premium amount, Banks may not want to increase the DICGC amount as it may impact the financials and profit of the Bank. You can check the premium amount in the table below.

Year	Amount
Jan 1 1962	0.05
Oct 1 1971	0.04
Jul 1 1993	0.05
Apr 1 2004	0.08
Apr 1 2005	0.10
Apr 1 2020	0.12

The government is now thinking about increasing the deposit insurance limit for bank deposits. Right now, this limit is set at ₹5 lakh, but it could be increased within the next six months.

Deposit Insurance and Credit Guarantee Corporation (DICGC) covers all types of bank deposits, such as:

• Savings accounts
• Current accounts
• Fixed deposits
• Recurring deposits

One more reason for the increase in the Limit may be the increasing inflation. Inflation has increased a lot in recent years and Rs.5 Lakh may seem to be very little. If the government increases the limit, then it will be really beneficial for bank customers in case of bank failure. It will also increase trust of individuals in banking system.