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  Business   In Other News  19 Nov 2019  Call to exempt banks from deposit cover

Call to exempt banks from deposit cover

THE ASIAN AGE. | FALAKNAAZ SYED
Published : Nov 19, 2019, 3:48 am IST
Updated : Nov 19, 2019, 3:48 am IST

The claims settled so far since 1962 is only Rs 5,120 crore and that too for the co-operative banks” added Venkatachalam.

Finance minister Nirmala Sitharaman
 Finance minister Nirmala Sitharaman

Mumbai: The All-India Bank Employees’ Association (AIBEA), the oldest and the largest bank union, has asked Finance Minister Nirmala Sitharaman to exempt the deposits of public sector banks and commercial banks from deposit insurance cover.

Arguing its case in a letter to the finance minister, the AIBEA said that as on March 31, 2019 there were a total of 2,098 banks covered by the Deposit Insurance Scheme — 19 public sector banks, 21 private banks, 46 foreign banks, 20 payment and small finance banks, 51 regional rural banks while a whopping 1,941 co-operative banks were covered. However the premium received for FY19 from commercial banks was Rs 11,190 crore while from the premium collected from co-operative banks was Rs 850 crore. A total premium of Rs 12,040 crore was received for FY19. But there were no claims paid for commercial banks while 15 co-operative banks were paid Rs 37 crore for FY19.

C. H. Venkatachalam, General Secretary AIBEA said, “Year after year, public sector banks and all commercial banks are required to pay huge premium to DICGC (Deposit Insurance and Credit Guarantee Corporation) but the claim ratio is NIL because there is no possibility of any bank being liquidated and forcing the situation of claiming the insured amount.”

“Because of these reasons, as on March 31, 2019, the Deposit Insurance Fund of DICGC is Rs 97,350 crore including a surplus of Rs 87,890 crore. The claims settled so far since 1962 is only Rs 5,120 crore and that too for the co-operative banks” added Venkatachalam.

The total deposits of co-operative banks are Rs 8,49,000 crore of which Rs 3,77,500 crore or 44 per cent are covered by deposit insurance. But in the case of 19 Public Sector Banks, the total deposits were at Rs 72 lakh crore of which only Rs 22 lakh crore or 30 per cent are covered by deposit insurance.

“In view of the above we submit to the government that the deposits of public sector banks and commercial banks which are covered by Section 45 of the Banking Regulations Act be exempted from the coverage of DICGC cover,” wrote AIBEA.

Tags: aibea, nirmala sitharaman