As of 2019-20 norms, the banks have to maintain an insurance amount of 5lakh per account to substitute for a major loss like defaulting or for contingencies. Until then banks are pushing harder to increase the previous supporter of 1 lakh as of Jan1993.
The decision to increase the safety of the deposits rather than concentrating on the bank's default itself is an additional load for the operator. We as a depositor should consider both, the same as the promoter.
- The first risk is, the bank itself defaulting and crawling for a bailout.
- The second is, will they be able to handle the liquidity crunch in case of ciphered cash.
SBI is the bank having an 80% cover on its deposit and private banks being the least near to 4%. The public sector amounts to 5,36,792 lakh crore in the current account and securing most of them. Public banks are always backed by the government but a bank should function as an individual entity like the private banks.
That's an advantage for the depositors.
Good Morning
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