Beyond deposit insurance

Mechanism should be economically viable

The central board of the Reserve Bank of India (RBI) is expected to raise the deposit insurance limit from Rs 1 lakh to Rs 5 lakh. This should be welcomed as it will cover most retail depositors of banks. As reported by this newspaper, a new scheme is also likely to be considered to cover wholesale deposits up to Rs 25 lakh. Besides, two other important proposals are expected to be examined. First, it could allow banks to obtain deposit insurance over and above the enhanced limit for both individual and institutional depositors. If implemented, it will help boost confidence,