The government has asked the Reserve Bank and Deposit Insurance and Credit Guarantee Corporation (DICGC) to adopt risk management system before doubling the insurance cover for bank deposits to Rs 2 lakh.
The proposal of the DICGC for increasing the deposit insurance cover for banks from the existing Rs 1 lakh to Rs 2 lakh has been examined, Finance Minister Pranab Mukherjee said in the Rajya Sabha.
"The government has advised the DICGC and the Reserve Bank of India to adopt a risk-based deposit insurance premium structure, before the proposal of the DICGC is considered for approval," he said.
As per the existing norms of Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the Reserve Bank of India (RBI), a maximum of Rs 1 lakh is paid to a depositor in case a bank goes insolvent.
Mukherjee said, DICGC may, having regard to its financial position and to the interest of the banking system of the country as a whole, increase the limit of deposit insurance cover.
The limit can be raised by DICGC with the prior approval of the union government, he added.
In a separate response, Mukherjee said, New Pension System (NPS), a defined contribution pension system, provides that annuity for government servants, should provide for pension for the employee, dependent children and spouse.
The type of pension will depend on the option exercised by the employee at the time of exit from NPS and while purchasing the annuity.
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