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Your money kept in a bank account or FD will now be completely safe, even if the bank goes bankrupt. The government will now guarantee your money and after any such accident, the government will pay your deposited capital. The central government has proposed in this regard that in the coming time, the amount of insurance available on bank deposits under the Credit Guarantee Scheme will be increased to Rs 12 lakh. This means that the government will guarantee the amount of up to Rs 12 lakh deposited in the bank in savings, current, or FD account.

According to Moneycontrol, the central government is preparing to increase the insurance cover on bank deposits from the current Rs 5 lakh to Rs 8-12 lakh. This change can be made by the end of February. Financial Services Secretary M Nagaraju had said after the budget that the government is considering increasing the limit of deposit insurance. The expected increase in bank deposit insurance cover is coming at a time when a cooperative lender company New India Co-operative Bank is facing regulatory action by the RBI.

RBI removed the board
The Reserve Bank has removed the board of the cooperative lender and appointed an administrator. This action has been taken after the scam of Rs 122 crore was exposed. Police action was also taken against the general manager and an associate in this case and both have been kept in custody till February 21. The cooperative bank has been barred from issuing new loans and deposit withdrawals have been suspended.

What is a credit guarantee

Insurance on bank deposits is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC). It is a wholly owned subsidiary of RBI, which manages deposit insurance in commercial banks, regional rural banks, local area banks, and cooperative banks. Deposit insurance is a safety shield that protects bank depositors from inability to repay the bank loan. This insurance covers all types of deposits, such as savings, fixed, current, and recurring, except foreign, central, or state government deposits and inter-bank deposits.

How much cover is available now

Under the Credit Guarantee Scheme, currently, the depositor gets insurance cover for an amount up to Rs 5 lakh. If a person has deposits in different banks, the limit of insurance coverage applies differently to the deposits in each bank. Deposit insurance is a tool that governments around the world are using to protect bank depositors from losses in case of bank failure or sinking and to safeguard the stability of the banking system. The United States was the first country to adopt a clear deposit insurance scheme in 1934. Countries like Mexico, Turkey, and Japan guarantee 100 percent coverage to depositors.

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