Finmin, IRDAI seek bank a/c insurance

BENGALURU: In the wake of the PMC Bank crisis, the finance ministry and insurance regulator IRDAI have asked insurers if they can come up with a product to provide coverage for deposits of above Rs 1 lakh. Currently, the Deposit Insurance and Credit Guarantee Corporation (DICGC) covers only deposits of Rs 1 lakh and below.

Insurers have weighed in with their thoughts on the proposal. They have expressed willingness to provide coverage, but have raised a concern that reinsurance might prove a hurdle. Simultaneously, the DICGC is also contemplating whether to increase its coverage of deposits from the current Rs 1 lakh to Rs 3-5 lakh.

The DICGC currently collects Re 1 for every Rs 1,000 insured by it. Sources said that insurers — after working out the risk incurred by them in covering commercial banks, regional rural banks, cooperative banks and others — might choose to price it slightly higher. “But this is likely a slow process as there are many amendments to be made to the Deposit Insurance and Credit Guarantee Corporation Act, 1961, before insurers can start covering this,” said sources.

Source: The Times of India