Government Not Planning Immediate Increase to ₹5 Lakh Deposit Insurance

The government has indicated that there is no immediate plan to increase the insurance cover on bank deposits beyond the current ₹5 lakh limit. The statement was made in a written reply by Minister of State for Finance Pankaj Chaudhary in the Rajya Sabha.

Follows Global Framework

Chaudhary said the current deposit insurance limit is in line with international practices. He referred to Core Principle 8 of the International Association of Deposit Insurers (IADI), which recommends that insurance coverage should be limited but sufficient to maintain depositor confidence.

The ₹5 lakh insurance cover is available per depositor per bank. It includes all types of deposits, savings, current, fixed, or recurring held in the same name and capacity. This applies across all branches of the same bank.

Nearly All Accounts Covered

As of March 31, 2025, about 97.6% of deposit accounts in India were fully covered under the existing insurance limit. However, this accounts for only 41.5% of the total deposit value. The current system is to offer protection mainly to small depositors.

Last Revision in 2020

The Deposit Insurance and Credit Guarantee Corporation (DICGC) had last revised the insurance limit from ₹1 lakh to ₹5 lakh on February 4, 2020. According to the government, any further increase will depend on the financial health of the DICGC and the condition of the banking sector.

Any proposal to raise the insurance limit must be approved by the central government under the DICGC Act. There is currently no such proposal under consideration.

The government stated that insuring all deposits is not considered necessary. Leaving some portion of deposits uninsured is seen as part of the overall framework of financial regulation.

Read More: RBI Aims to Tighten Rules for Digital Banking!

Conclusion

As of now, the government does not plan to revise the ₹5 lakh deposit insurance cover. Any future changes will depend on regulatory and financial assessments.

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