s on capital, risk-tied deposit insurance

not differentiate between banks based on their soundness," RBI said, meaning a financially robust bank pays the same insurance rate as a riskier one.

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Under the new risk-based premium framework, this will change. The premium a bank pays will be directly linked to its risk profile.

Vijay Mani, banking and capital markets leader at Deloitte India, said, "Developing a risk-based premium system is a complex matter, and some differences of opinion with banks are to be expected."

There may be concerns around the fairness of measurement, but on balance, "this represents an improvement over a flat-rate system, as it helps ensure better alignment of incentives," Mani added.

The Reserve Bank of India has also decided to withdraw its proposal to stop entities within a bank group from undertaking similar business activities. Now, banks and their non-bank financial companies can operate in a similar line of business without banks having to merge or divest their stakes in their subsidiary.