Mumbai: A day after the bank unions wrote to the Finance Minister asking it to scrap deposit insurance cover on bank deposits, the All-India Reserve Bank Employees Association (AIRBEA) has asked the government to raise the insurance cover to Rs 10 lakh from Rs 1 lakh now.
Samir Ghosh, General Secretary of AIRBEA, said, “The current limit of Rs 1 lakh continues from May 1, 1993 for more than two decades-and-a-half and during the time the value of the rupee has eroded sharply, necessitating immediate augmentation of coverage.”
Ghosh said that while in India, in current dollar terms, the insurance coverage provided by Deposit Insurance and Credit Guarantee Corporation (DICGC) is a paltry $1,508, the comparative coverage for other countries is much higher. For instance Russia $19,210, China $81,000, Brazil $64,025, Australia $18,2650 and the US $2,50,000. After the 2008 global financial meltdown, most countries raised their coverage substantially to protect bank depositors.
“In this backdrop, taking all factors into consideration, AIRBEA suggested earlier for the insured deposit of atleast Rs 10 lakh, covering all types of deposits of an individual which we reiterate and urge the government to consider, it comes to $14,000, yet much less than the countries aforementioned,” said Ghosh.
At present DICGC insures each bank depositor upto Rs 1 lakh for both principal and interest.
On Monday, All India Bank Employees' Associ-ation (AIBEA), the oldest and largest bank union has asked Finance Minister Nirmala Sitharaman to exempt the deposits of public sector banks and commercial banks from Deposit Insurance Cover. C. H. Venkatachalam, General Secretary AIBEA, wrote to Seetharaman, saying, “Year after year, public sector banks and all commercial banks are required to pay huge premium to DICGC but the claim ratio is NIL.”