Banks approach RBI for higher deposit cover for senior citizens: Report

Banks approach RBI to pitch for higher deposit cover for senior citizens: Report

Banks have approached the Reserve Bank of India (RBI) pitching for a higher deposit cover for senior citizens, The Economic Times has reported.

The bankers, following an internal meeting in September, collectively decided to take the matter to the RBI.

"We have had an informal discussion with the regulator and are now in the process of submitting a more detailed plan to both the government and the RBI within this month," the report quoted a senior bank executive as saying.

Deposit insurance coverage is set at Rs 5 lakh per depositor per insured bank. Banks have suggested that the amount be raised for senior citizens, as they are the most vulnerable section of depositors.

"Most of them are solely dependent on income coming from their bank deposits, and that's why, considering factors such as life expectancy and inflation, the protection amount should be increased periodically," the executive added.

Moneycontrol couldn’t verify the report independently.

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In 2021,  Parliament had passed the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021, in which depositors of troubled banks would get back amounts below Rs 5 lakh within 90 days even if the RBI puts a bank under moratorium.

In 2020, the government raised insurance cover on deposit five-folds to Rs 5 lakh to provide support to depositors of ailing lenders such as Punjab and Maharashtra Co-operative (PMC) Bank. Following the collapse of PMC Bank, Yes Bank and Lakshmi Vilas Bank, too, came under stress, leading to restructuring by the regulator and the government.