Within a few days of the New India Cooperative Bank scam surfaced, the top officials of the Union Finance Ministry said that the government was actively considering increasing the deposit insurance limit from Rs five lakh.
The Secretary of the Department of Financial Services also said that such a proposal is currently under consideration. The deposit insurance claim begins when the lender’s condition deteriorates. Over the years, the Deposit Insurance and Credit Guarantee Corporation (DICGC) has been settling such claims. The organization collects premiums from banks for insurance provided by it. And most of the claims are to be made in the case of cooperative lenders. According to a report, 90 percent of the 1.3 lakh depositors of New India Cooperative Bank will be covered under DICGC.
The press conference organized in the presence of Union Finance Minister Nirmala Sitharaman told that the government is actively considering increasing the deposit insurance limit. If the government takes any decision in this regard or gets approval, the notification will be published immediately. Currently, the case of New India Cooperative Bank is pending before the Reserve Bank of India (RBI).
It is noteworthy that after the PMC Bank scam, DICGC had increased the insurance limit from Rs 1 lakh to Rs five lakh in the year 2020. The Economic Affairs Secretary said that the cooperative banking sector is well managed under the supervision of RBI and the overall health of the region has been strengthened by the central bank. He said that the entire area should not be doubted with a bank crisis. It is the work of the market regulator to take action against the mistakes that make mistakes.
The scam was revealed after direct inspection at the New India Co-operative Bank. It was found that cash worth Rs 122 crore was missing. Investigation revealed that the bank’s finance general manager had allegedly given a large part of a local builder to a local builder.
