The ratio of insured deposits to assessable deposits in the banking system declined to 46.31 per cent in FY2023 from 49 per cent in FY2022 as customers, lured by attractive deposit rates, placed larger deposits (over and above the Rs 5 lakh deposit insurance cover) with banks, going by latest Deposit Insurance and Credit Guarantee Corporation (DICGC) data.

This means that bank customers preferred to place larger quantum (Rs 5 lakh and above) of deposits (accounting for 53.69 per cent of the deposits by value), which remained uninsured. In the preceding year, 51 per cent of the deposits were uninsured. Deposit insurance cover is available on deposits up to Rs 5 lakh.

This development comes even as interest rates on term deposits of over one year tenor rose to 6.00-7.25 per cent range as at March-end 2023 from 5.00-5.60 per cent as at March-end 2022 in the backdrop of RBI upping its policy repo rate and tight liquidity conditions.

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Fully protected and partially protected accounts accounted for 98.1 per cent and 1.9 per cent, respectively, of the total number of accounts (300.10 crore), per DICGC’s FY2023 annual report.

The Corporation’s premium income increased by 9.70 per cent year-on-year (yoy) to Rs 21,381 crore in FY23 (Rs 19,491 crore in the year-ago period).

The five-fold increase in the insurance limit to ₹5 lakh since February 2020 has increased the deposit insurance premium to be paid by banks from 10 paise per ₹100 of assessable deposits to 12 paise, effective from April 1, 2020.

At present, DICGC collects premiums at a uniform rate. The current maximum limit is 15 paise. However, as per the amendment to Section 15 (1) of the DICGC Act made in August 2021, the Corporation may raise the limit of 15 paise per annum per ₹100 of deposits on insurance premiums with the prior approval of RBI, considering its financial position and the interests of the banking sector in the country as a whole.

Net claims sharply declined to Rs 730 crore in FY23 against Rs 8,121 crore in FY22. During FY22, DICGC paid ₹3,791.55 crores to the insured depositors of the erstwhile Punjab and Maharashtra Co-operative Bank as per the scheme amalgamation with Unity Small Finance Bank.

The Corporation reported a 61 per cent yoy jump in revenue surplus after tax at Rs 24,559 crore in FY23 against Rs 15,239 crore in FY22.

DICGC insures all bank deposits except (i) deposits of foreign governments; (ii) deposits of Central/State Governments; (iii) interbank deposits; (iv) deposits received outside India, and (v) deposits specifically exempted by the Corporation with the prior approval of RBI.