Key Takeaways
- AIBEA appeals to Finance Minister Nirmala Sitharaman to exempt PSBs and commercial banks from DIS.
- The claim ratio for DICGC is nil, making the insured amount unnecessary.
- AIBEA suggests charging premium only on the deposit amount insured and not on the total assessable deposits of the bank.
Hyderabad: All India Bank Employees’ Association (AIBEA) on Friday appealed to Union Finance Minister Nirmala Sitharaman to exempt public sector banks and commercial banks from the purview of Deposit Insurance Scheme (DIS) in view of Section of 45 of Banking Regulations Act.
‘We learnt from the media reports that the RBI and Government are toying with the idea of further increasing the insurance cover for bank eposits under the Deposit Insurance Scheme’, AIBEA General Secretary Ch Venkatachalam pointed out in a letter to the Finance Minister.
He said for cooperative banks, the premium should be charged only on the deposit amount insured and not on the total assessable deposits of the bank.
Venkatachalam said ‘Public sector banks and commercial banks pay huge premiums to DICGC each year. However, the claim ratio is zero because there is no chance of a bank being liquidated, making the insured amount unnecessary. ‘
Because of these reasons, as of March 31, 2024, the Deposit Insurance Fund of DICGC is Rs. 1,98,753 crores. The claims settled so far since 1962 are only Rs. 5,359 crores and that too for the co-operative banks, he said.
The AIBEA submitted to the government that the deposits of public sector banks and commercial banks which are covered by Section 45 of the Banking Regulations Act, be exempted from the coverage of DICGC cover.
Venkatachalam said out of 1997 banks covered by the DICGC, 1857 are co-operative banks. Only these banks are running the risk of facing problems of closure and liquidation and the seposits of these banks need to be covered by DICGC.
Even in the case of these banks, only to the extent of deposits covered by the insurance cover, premium should be charged and not on the total assessable Deposits which is much higher.
‘We are sure that the Government would keep the above submissions and make suitable announcement in the Union Budget on Saturday.’
