The debacle of Punjab and Maharashtra Co-operative (PMC) Bank has brought back the focus on deposit insurance and depositors’ protection. Deposit insurance ensures the depositor gets a certain amount, before the bank pays other parties it owes money to during the liquidation process. Second, the Indian economy has changed drastically since then, with the average per capita income of Indians and financial savings improving. Another compelling reason for increasing the deposit insurance limit is the fall in coverage. Even so, deposit insurance is a necessary comfort given to people who trust their savings with the banking system.

Source: Mint September 29, 2019 16:30 UTC