When banks were falling like ninepins in the US, India was not far behind with two lenders going belly-up for every five in the world’s largest economy during the financial year 2008-09. As many as 19 Indian co-operative banks collapsed for the 12 months ended March 2009, as against 44 American entities.
Consequently, the Reserve Bank of India’s (RBI’s) credit insurance arm had to pay over Rs 142 crore to depositors to cover the liabilities of these 19 entities. Under the insurance norms of the Deposit Insurance and Credit Guarantee Corporation, a wholly-owned subsidiary of the RBI, a maximum of Rs 1 lakh is paid to a depositor in case his bank becomes insolvent.
From April 2008 till March 2009, a whopping 44 lenders in America were shut down.
