NEW DELHI/MUMBAI (Reuters) – India is actively considering raising the bank deposit insurance coverage, a top official said on Monday, days after the central bank suspended withdrawals from New India Co-operative Bank over supervisory concerns.
Every Indian bank account holder’s deposits are insured up to 500,000 rupees ($5,758) in case a bank goes under. In 2020, the limit was raised from 100,000 rupees after restrictions were placed on Punjab and Maharashtra Cooperative Bank over financial irregularities.
“This is under active consideration of the government,” Financial Services Secretary M. Nagaraju said of another hike.
“As and when the government approves, we will notify,” he said, without specifying the new limit under consideration.
Asked about the waning depositor sentiment after the restrictions on New India Co-operative Bank, Nagaraju said, the Reserve Bank of India (RBI) is appraised of the matter, declining to comment further.
On February 13, RBI superseded the Mumbai-based lender’s board and barred it from issuing new loans while suspending withdrawals for six months. ($1 = 86.8410 Indian rupees)
(Reporting by Sai Ishwarbharath B, writing by Nikunj Ohri; Editing by Savio D’Souza)
