Risk-Based Deposit Insurance Premium from 1 April
Why in the news
The RBI announced risk-linked deposit insurance premiums from 1 April; DICGC will implement them.
| Point | Earlier | New |
|---|---|---|
| Model | Flat rate since 1962 | Risk-based |
| Rate | 12 paise per ₹100 of assessable deposits | Card rate adjusted for risk and vintage |
| Drawback | Strong and weak banks treated alike; no push for prudence | Needs adequate data |
Key facts
- Premium reflects capital adequacy, asset quality, earnings, liquidity, supervisory view and potential loss to the fund.
- Tier-1 model: scheduled commercial banks except RRBs. Tier-2 model: RRBs and cooperative banks.
- Variation capped at ±33.33% of the card rate to avoid shocks.
- Vintage incentive: up to 25% off for long-standing banks without major claims.
- Payments banks and local area banks stay on the flat card rate (limited data); UCBs under corrective action join after restrictions end.
Exam angle
- Implementer: DICGC. Flat system began: 1962.