The Reserve Bank of India ( RBI ) may retain the current 12 paise/Rs 100 cap on deposit insurance premiums, even after it moves towards the new risk-based premium model (RBP) proposed in the October policy, said banking industry sources. However, for well-managed banks, the insurance premium is expected to go down. Currently, all banks the Deposit Insurance and Credit Guarantee Corporation ( DICGC ) pay an uniform premium of 12p/Rs 100.

“The premium for cooperative banks or other less well-run banks is not expected to exceed the current 12 paise cap. They will continue to pay their existing premium,” said a banker. He also added that “well-run public sector, private sector, and strong cooperative banks are likely to see a decrease in their premiums, freeing up funds for better use.”

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