Budget 2020: Deposits up to Rs 5 lakh insured

The finance minister has announced that the deposit insurance coverage would be increased to Rs 5 lakh per person.

This means that the deposits of up to Rs 5 lakh of depositors would be covered and safe. The deposit insurance scheme for banks is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC).

The current coverage limit stands at Rs 1 lakh. Thus there is a massive increase in insured deposits in the case of scheduled commercial banks.

The FM also made it clear that the deposits in scheduled commercial banks are "absolutely safe."

This should allay fears of depositors, who may be worried in the backdrop of non-performing assets and concerns around banks being able to honour deposit repayments in case of financial stress.