HYDERABAD: Not just bank deposits, but insurance cover for assessable deposits too is heading south.
As per the Reserve Bank of India’s FY19 annual report, it fell to 28.1 per cent as on March 2019 down from 30 per cent a year before.
Two decades ago, it was as high as 76 per cent in March 1996, but crashed to about 60 per cent last decade and began its free fall since then. However, the central bank isn’t overtly worried, taking comfort in the international benchmark of 20-30 per cent.
“In terms of amount, the total insured deposits of Rs 33,70,000 crore as on March, 2019 constituted 28.1 per cent of assessable deposits of Rs 120,05,100 crore against the international benchmark of 20 to 30 per cent,” it noted adding, the number of fully protected accounts (2,000 mn) constitute 92 per cent of the total number of accounts (2,174 mn) as against the international benchmark of 80 per cent.
But not all agree. Anil Gupta, VP, sector head — Financial Sector Ratings, ICRA earlier told TNIE that there should be a revision in insurance limit to cover a larger portion of total deposits as there are a large number of depositor accounts that have less than Rs 1 lakh. That’s because, India’s coverage limits vary markedly from other countries, especially when other government guarantees are accounted for, data from the World Bank shows.
According to the Deposit Insurance and Credit Guarantee Corporation Act, in terms of value the insurance limit is currently capped at Rs 1 lakh per depositor per bank, and was last revised 25 years ago. India’s Rs 1 lakh cover translates to $1,613, whereas statutory coverage limits are as high as $95,000 in Japan, $1.6 lakh in Indonesia, $2.5 lakh in the US, $15 lakh in Thailand. Unbelievably, countries like Turkmenistan and Uzbekistan even offer blanket guarantees on deposits!