Several Founders, Co-Founders, CXO Bankers, CXO Fintech professional & people who participated in the ePanel discussions:

  • Dr. R Bhaskaran, Strategic Training Advisor in Banking & Finance
  • Mr. P B Prakash, Head-Financial Institutions Group, IndusInd Bank
  • Mr. Neeraj Chandra, Head of Operations and Technology, India, Abu Dhabi Commercial Bank
  • Mr. Ruchit Jangid, Former Business Head, SOTC Travel Ltd
  • Mr. Rakesh Watal, Head Liability Operations Western Region, HDFC Bank
  • Mr. Vikas R Panditrao, Co-Founder, Forum of Industry and Academic Knowledge Sharing (FIAKS)
  • Many other CEO/CXO Bankers & Fintech professionals on FIAKS Forum requested to remain anonymous

When the bank fails and does not have money to pay its depositors, then there steps in deposit insurance which is a protection cover for bank deposit holders. Deposit Insurance and Credit Guarantee Corporation (DICGC) which is a wholly-owned subsidiary of the RBI offers deposit insurance. Recently, the bank deposit insurance has been revised to Rs. 5 lakh per depositor as against Rs. 1 lakh.

So recently FIAKS e-bulletin 2.0 was released which provides an overview of unequal distribution of new bank branches opening in rural, semi-urban, urban & metropolitan regions in India during the year 2019-20. The report also highlights the total assessable deposits and insured deposits across various bank categories. [1]

The report highlights that percentage of insured deposits in co-operative banks is higher than that of Public Sector, Private Sector, and Foreign banks

Well, ideally cooperative bank deposits should be more safe compared to private or foreign banks? Regulators have given unconditional guarantees to private banks (eg YES Bank) and bailed them out from taxpayer’s money. Isn’t this sad?

Aren’t cooperative banks unnecessarily wasting a big sum of money on insurance premium while foreign banks are saving on this front? Insurance cover to be equal for all the banks, right?

  • Well, the insurance cover is the same for all banks up to INR 5 lakhs per bank in the same capacity.
  • Foreign banks cater to very high net worth clients who may be keeping 50 lakhs average balance with them of which only 5 lakhs is covered by insurance. But smaller banks especially co-op banks will have a large number of depositors keeping less than 5 lakhs and hence fully insured deposits.

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