NEW DELHI: How safe is your bank where you are putting your hard-earned money? Given the banking crisis in recent years and the PMC Bank fraud, people should be very wary of financial institutions they are banking with.
The recent cases of bank failures — especially the cooperative banks have enhanced the significance of deposit insurance in India.
The RBI annual report released recently says that five cooperative banks and one local area bank were liquidated in 2020-21.
According to the annual report, the Deposit Insurance and Credit Guarantee Corporation, which provides deposit insurance in case of failure of banks, has processed claims amounting to Rs 993 crore during 2020-21 to ensure payment to insured depositors of liquidated banks.
Of this, the corporation has settled claims amounting to Rs 564 crore in respect of nine co-operative banks during 2020-21.
An amount of Rs 330 crore has been settled in case of one cooperative bank in April 2021.
However, the net outgo of funds towards settlement of claims from the Corporation was also lower as there was a recovery of Rs 568 crore during 2020-21.
Deposit insurance in India covers all deposits up to Rs 5 lakh. The number of fully protected stood at 247.8 crore or 98.1 per cent of the total number of accounts.