New Delhi: Prime Minister Narendra Modi on Sunday said that the move to increase deposit insurance cover to ₹5 lakhs from ₹1 lakh, will fully insure ₹76 lakh crore of savings. “Such a comprehensive insurance cover is not there even in developed nations,” Mr. Modi said adding that, “This will cover almost 98% of all banking accounts.”
The Prime Minister also touched upon the move to introduce a 90-day deadline for depositors to get their money back. “I am happy that within 90 days of the law being notified, thousands of depositors have already been repaid,” he said, adding that banks play a big role in the nation’s prosperity, however, to ensure prosperity of bank, money of depositors need to be safeguarded.
“To save banks, we have to protect depositors and by doing this, we have saved banks as well as depositors,” he said.
At the event, RBI governor Shaktikanta Das had pointed out that the “first set of banks where 90 days were completed on November 29, all the claims were processed,” with the claim receipt and settlement process now automated by the DICGC.
Elaborating on the subject of banking infrastructure in the country, Mr. Modi highlighted that, “Today, almost every village has a banking facility within 5 kilometres with 8.5 lakh banking touch points.” He noted this to be a significant change from a time “banks are just for the well-off and rich.”
“The country’s banking system has now been democratised in the true sense of the word,” he said.
According to the Prime Minister, the progress in banking infrastructure has provided maximum benefit to the women of the country. Citing the latest NFHS data, Mr. Modi pointed out that, 80% of women have their own bank accounts.
“The number of accounts for women in urban India were matched by those in rural India,” he said.
Addressing the banking sector, the Prime Minister said, “All banks should set a target to do 1.5 to 2 times more than they have done in the past 75 years. And let us see the outcome of that for the country.”
The RBI Governor also spoke on “new governance guidelines for commercial banks”, adding that a committee has been constituted for “bringing about reforms in the urban co-operative sector.”
“To strengthen resilience, we are now doing root cause analysis, looking at business models of banks to see if they are viable, without of course, interfering in the commercial flexibility which the banks must have for their success,” Mr. Das said.
However, the Governor also urged the depositors to be discerning. “It’s very important to keep in mind that higher returns are usually associated with higher risks. Just because a bank is offering higher interest, the depositors should be very careful in putting their money in chasing such high returns,” he said.
Finance Minister Nirmala Sitharaman, at the event also noted that, “Public sector banks health has improved so much that they can raise money from the market.” An indication, according to her of the depositors’ money being safe in the bank.
“The approach of the government has been sensitive to the needs of the middle class,” Ms. Sitharaman said, bringing up the Special Window for Affordable and Mid Income Housing (SWAMIH) scheme as an example.
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