A stable banking system

Deposit insurance must be extended substantially

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The Reserve Bank of India's recent decision to impose curbs, including withdrawal restrictions, on Mumbai-based New India Cooperative Bank has once again brought attention to how individuals suffer due to the inefficiency and mismanagement in banks. Lives depend on savings deposited in banks. There is an ongoing debate whether India still needs cooperative banks, given the increased reach of commercial banks, enabled by technology.

Another related area worth debating is whether individuals should suffer in such cases, which are essentially a result of inadequate regulatory oversight and mismanagement by the bank concerned. In this regard, to protect depositors, deposits of up to ₹5 lakh are insured by Deposit Insurance and Credit Guarantee Corporation. However, as a report in this newspaper showed on Tuesday, in terms of value, only about 43.1 per cent of accessible deposits are insured. The government is reported to be considering increasing the insurance limit.