The Finance minister while presenting Budget 2020 proposes that the Insurance coverage deposit limit will be increased from Rs 1 lakh to Rs 5 lakh per depositor.
Nirmala Sitharam also informed the august House that a robust mechanism is in place to monitor the health of all Scheduled Commercial Banks and that depositors’ money is safe.
Further, she stated that the Deposit Insurance and Credit Guarantee Corporation (DICGC) has been permitted to increase Deposit Insurance Coverage for a depositor, which is now `one lakh to `five lakh per depositor.
Each depositor in a bank is insured up to a maximum of 5,00,000 (Rupees five Lakh) for both principal and interest amount held by him in the same right and same capacity as on the date of liquidation/cancellation of bank’s license or the date on which the scheme of amalgamation/merger/reconstruction comes into force.
The DICGC is liable to pay to each depositor through the liquidator, the amount of his deposit up to Rupees five lakh within two months from the date of receipt of claim list from the liquidator.
The DICGC pays the bank concerned, the difference between the full amount of deposit or the limit of insurance cover in force at the time, whichever is less and the amount received by him under the reconstruction/amalgamation scheme within two months from the date of receipt of claim list from the transferee bank / Chief Executive Officer of the insured bank/transferee bank.
After Budget 2020 deposit of insurance coverage has been increased to a maximum of 5,00,000 for each user for both principal and interest amount. A maximum of 5,00,000 to be ensured to all those accounts If the depositor has accounts in different banks. However, if there are more accounts in the same bank, all of those are treated as a single account.
