Amit Chandan feels silly today thinking back one week earlier when he joined the mob in Gujarat as they rushed to remove their savings from ICICI Bank ATMs.
The mob fell prey to false rumours that the private sector bank had failed.
When the bank opened officially on Wednesday, Chandan felt even worse returning the Rs 50,000 he had withdrawn on Friday last when he unnecessarily panicked.
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He is not alone. Scores of depositors do not realise that unique to India banks under the supervision of the Reserve Bank of India (RBI) cannot go under Moreover, even if a systemic crisis were to occur, the small depositor would have recourse to the deposit insurance scheme made mandatory to all banks.
In the event of any insured bank going in for liquidation, reconstruction or amalgamation, every depositor of that bank is entitled to repayment of his deposits in all branches of that bank subject to a monetary ceiling of Rs 1,00,000.
The insurance scheme provides automatic coverage for deposits in all commercial banks, including regional rural banks as well as co-operative banks in states that have passed the enabling legislation amending their local co-operative societies acts.
The Deposit Insurance and Credit Guarantee Corporation (DICGC) is the only organisation that provides deposit insurance in India.
Few depositors were aware of this enabling protection. More were afraid of being caught in the realms of what happened when Madhavpura Co-operative Bank went bust in 2001 on account of the pay-order scam.
Many in Ahmedabad continue to wait for DICGC to issue their Rs 1 lakh cheques, and certainly did not wish to wait and apply for the next cheque should ICICI Bank be declared insolvent.
What most depositors like Chandan fail to realise is that in the Indian banking industry, the risk is almost negligible.
Scheduled commercial banks are semi-sovereign in nature