Bank Deposit Insurance Likely To Be Enhanced Beyond Rs 5 Lakh

New Delhi, Feb 18 (KNN) The Ministry of Finance is evaluating a proposal to increase the insurance coverage for bank deposits beyond the current limit of Rs 5 lakh, according to a senior ministry official's statement on Monday. 

This development comes three days after the Reserve Bank of India placed New India Co-operative Bank under moratorium due to irregularities.

Department of Financial Services Secretary M Nagaraju confirmed that the proposal for enhanced deposit insurance is under active consideration during a press conference attended by Finance Minister Nirmala Sitharaman. 

The government previously raised the insurance limit from Rs 1 lakh to Rs 5 lakh in 2020 following the Punjab and Maharashtra Co-operative Bank crisis in 2019.

Economic Affairs Secretary Ajay Seth addressed concerns about the cooperative banking sector, affirming its robust health under RBI supervision. 

He emphasised that isolated incidents should not cast doubt on the sector's overall stability, noting that regulatory intervention against non-compliant institutions is part of standard oversight procedures.

During her interaction with bankers, Finance Minister Sitharaman reaffirmed the government's commitment to maintaining the fiscal deficit below 4.5 percent, as outlined in the July Budget. 

She highlighted ongoing reforms aimed at strengthening manufacturing, improving business conditions, and developing social infrastructure. 

The Minister emphasised that the reform momentum would continue, citing recent investments in space and nuclear sectors as evidence of expanding opportunities.

The Budget maintains a strong focus on capital expenditure, with effective allocations exceeding Rs 19 lakh crore for the next fiscal year. 

Sitharaman emphasised the Modi government's strategic shift in budgetary approach, ensuring responsible management of taxpayer funds by directing borrowings toward capital asset development. 

She noted that government borrowings for fiscal deficit management closely align with capital expenditure investments.

In a significant development for the MSME sector, the Finance Minister launched the Mutual Credit Guarantee Scheme, enabling loans up to Rs 100 crore for equipment purchases without collateral requirements. 

Addressing tariff policies, she emphasised the government's ongoing commitment to creating an investor-friendly environment through continuous duty rationalisation and reduction measures.

(KNN Bureau)