Govt may up bank deposit protection limit to ₹7.5 lakh

The finance ministry has sent the proposal to the Prime Minister’s Office for consideration

- Harsh Kumar

Deposits of up to ₹7.5 lakh in bank accounts may soon be protected against bank failures, up from the current cover of ₹5 lakh, according to three people aware of the matter.

“The finance ministry has sent a proposal to raise the deposit insurance limit to the Prime Minister’s Office (PMO) for consideration,” the people said on condition of anonymity.

If approved, this would be the first increase in the deposit insurance limit since February 2020, when the government raised the cover five-fold from ₹1 lakh to ₹5 lakh—including principal and interest across all accounts held in a bank.

The move follows a series of banking crises, including those involving Punjab and Maharashtra Co-operative Bank and Yes Bank.

“After all assessments, the ₹7.5 lakh as bank deposit insurance cover has been given for further approval, and we are hoping it will be announced soon,” one of the people cited above, a government official, said.