Finance Minister Nirmala Sitharaman on Friday announced the government’s decision to raise the Rs 1-lakh insurance cover limit to Rs 5 lakh for greater protection of depositors’ money in banks.
The limit was last revised nearly 25 years ago in 1993.
Sitharaman, who was presenting her budget proposals for 2020-21, said the Deposit Insurance and Credit Guarantee Corporation has been permitted to increase deposit insurance coverage to Rs 5 lakh per depositor from Rs 1 lakh.
The limit had not been revised since 1993, when it was increased from Rs 30,000. Officials had earlier indicated that the government could raise the limit by Rs 2 lakh. Sitharaman went beyond this recommendation and proposed to quintuple the limit to Rs 5 lakh.
The move comes in the wake of the crisis at Mumbai-headquartered Punjab and Maharashtra Cooperative Bank (PMC) where customers had not been able to withdraw money after the central bank found violations of banking rules and under-reporting of bad loans.
Sitharaman also announced the government’s decision to amend the Companies Act to decriminalise civil offences. She said her government would not tolerate tax harassment and added that wealth creators will be respected in the country.
Taxpayer’s charter will be part of statute, the finance minister added.
