The Finance Ministry is looking to raise the current limit of ₹5 lakh for deposit insurance.
Money deposited by bank customers is insured under the Deposit Insurance and Credit Guarantee Corporation Act, 1961 by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
The deposit insurance limit was increased to ₹5 lakh in 2020 from ₹1 lakh. 1 Lakh was fixed in 1993.
When a bank fails due to any uncertainties, the DICGC acts as a guard to secure the money of depositors.
The government is planning to increase the deposit insurance limit after the Reserve Bank of India (RBI) placed curbs on the Mumbai-based New India Co-operative Bank for lack of liquidity.
