New Delhi, Finance Minister Nirmala Sitharaman, on Saturday, announced a big relief to the common people to increase the insurance cover of Rs 1 lakh on bank deposits to Rs five lakh in the general budget. The government has taken this decision after the Punjab and Maharashtra Cooperative Bank (PMC) scandal surfaced last year. The bank's business was called off following the scandal, causing losses to thousands of depositors.
The government and the Reserve Bank of India (RBI) have been under severe criticism for the last few months for fixing the limit of insurance cover for bank deposits of Rs 1 lakh.
According to the RBI guidelines, deposits in all commercial banks and cooperative banks under the Deposit Insurance and Credit Guarantee Corporation (DICGC) are under insurance. It was still one lakh rupees. This meant that whatever amount of money the customer deposited in the bank, only one lakh rupees had to be given back to the bank in the event of insolvency or closure. But, now this amount has been increased to five lakhs, which means in the event of a bank sinking, the customer will get up to five lakhs on the basis of his total deposits and interest.
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