Deposit insurance limit may increase from Rs 5 lakh to Rs 15 lakh: Report

Recently, the Reserve Bank of India (RBI) imposed a moratorium on New India Co-operative Bank due to financial irregularities. Following this, Zee Business highlighted the issue of deposit insurance and its importance for depositors’ security. The Indian government is actively considering increasing the deposit insurance limit from Rs 5 lakh to Rs 15 lakh. This move comes after the recent scam at New India Co-operative Bank, which raised concerns about the safety of depositors’ money.

The Finance Ministry is leading the discussions on increasing deposit insurance. During a post-budget meeting, Zee Business raised this issue with the ministry. In response, M. Nagaraju, Secretary of the Department of Financial Services, confirmed that the government is actively considering the proposal.

When did this issue arise?

The need for higher deposit insurance resurfaced after the New India Co-operative Bank scam in 2025. However, a similar situation occurred in 2019 when Punjab and Maharashtra Co-operative Bank (PMC) collapsed. At that time, the deposit insurance limit was raised from Rs 1 lakh to Rs 5 lakh.

Where will it be discussed?

This issue may be an important topic in the upcoming meeting on March 4, where CEOs of state banks will discuss financial sector developments.

Why is it important?

Increasing the deposit insurance limit to Rs 15 lakh will provide stronger financial protection to depositors. If a bank fails, customers will have a safety net of up to Rs 15 lakh. This will boost confidence in the banking system, reduce risks for investors, and ensure financial stability.

How will it be implemented?

The Deposit Insurance and Credit Guarantee Corporation (DICGC), established in 1962, is responsible for deposit insurance in India. If the proposal is approved, DICGC will implement the revised limit to safeguard depositors’ money. This move is expected to bring relief to depositors and reinforce trust in the banking sector.

Benefits of Rs 15 lakh deposit insurance limit

Increasing the deposit insurance limit to Rs 15 lakh will benefit depositors in several ways:

• Enhanced Security: In case of bank failure, depositors will get protection for their deposits up to Rs 15 lakh.
• Increased Confidence: Customers with large deposits will feel more secure about their savings.
• Reduced Risk: Investors will face lower risk, and financial stability will increase.
• Boost in Banking Confidence: The banking sector will see increased trust, and customers will have peace of mind.