25
Monday
January 2021
4:18 AM IST
News Headlines
With morale running high, Aizawl FC aim for win over Indian Arrows        England bowl Sri Lanka out for 381 in 2nd test        Coal India says geared up to meet any surge in fuel demand from power sector        Customary 'Halwa Ceremony' kickstarts process of compilation Budget documents        Larry King, broadcasting giant for half-century, dies at 87        UN: Violence in Sudan's Darfur killed 250, displaced 100,000        At 78 and the oldest president, Biden sees a world changed        Delhi Police has given nod to farmers' tractor parade on Jan 26, claim protesting unions        Govt to continue ban on Chinese apps including Tiktok        Rahul Gandhi assures revisiting GST when Cong is voted to power at Centre        Strong India following Netaji's footsteps, from LOC to LAC: PM        Stage set for grand finale of 23rd JK Racing Tyre National Racing Championship        India's track and field athletes to have first shot at Olympics in IGP Series starting Feb 18        Red carpet welcome for Rahane; Siraj heads straight to father's grave        Average flat size increases 10 pc in 2020 across 7 cities to 1,150 sq ft: Report        Rupee gains 6 paise to close near 5-month high of 72.99 vs USD        Experts: 15 more days to reach trapped China mine workers        Global Teacher Prize winner Ranjitsinh Disale hails Biden's education focus        India provides 1 million doses of COVID-19 vaccine to Nepal        SC notice to Centre, others on plea against web series Mirzapur'        
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Business News
Deposit insurance hike: RBI says not to hit banks balance-sheets
 
Mumbai: The Reserve Bank does not see any major impact on the balance-sheets of banks due to the five-fold hike in deposit insurance to Rs 5 lakh.

Following the failure of a number of cooperative banks, with the city-based PMC Bank being the latest and the largest last year, the budget allowed the Deposit Insurance and Credit Guarantee Corporation (DICGC) to raise deposit insurance coverage to Rs 5 lakh from Rs 1 lakh.

"The premium is something, which we consider, will increase from 10 paise to 12 paisa per Rs 100 for the time being. So, the impact on banks' balance sheets is not likely to be much," RBI Deputy Governor B P Kanungo told reporters during the post-policy presser.

The hike in deposit insurance coverage has been a long pending demand from bank depositors and it recently came to fore after the crisis at Punjab & Maharashtra Cooperative (PMC) Bank. It can be noted that in 2019 alone more than 30 cooperative banks went belly up in Maharashtra alone.

The DICGC, a wholly-owned subsidiary of the Reserve Bank, provides insurance cover on bank deposits. At present, the DICGC provides Rs 1 lakh insurance to a depositor regardless of the deposit amount, in case the lender fails or gets liquidated.

The corporation insured each bank depositor up to a maximum of Rs 1 lakh for both principal and interest amount held by them as on the date of liquidation/cancellation of a bank's licence or the date on which the scheme of amalgamation/merger comes into force.

It can be recalled that way back in 2009, the Raghuram Rajan committee on financial sector reforms had recommended strengthening the capacity of the DICGC, a more explicit system of prompt, corrective action, and making deposit insurance premia more risk-based.

On the PMC Bank crisis, Das said the administrator and the advisory committee now have greater clarity with regard to the financial position of the bank and they are working out the next course of action.

The multi-state co-operative bank has been put under an RBI administrator since September 23, 2019, after the regulator found financial irregularities including under reporting of loans and non performing assets of real estate developer HDIL.

The central bank also sacked the board of the bank and appointed an administrator.

In September, it was reported that the co-operative lender's actual exposure to the bankrupt HDIL was over Rs 6,500 crore -- which is 73 per cent of its entire assets of Rs 8,880 crore.

Meanwhile welcoming the budget proposal to make the RBI the full regulator of cooperative banks, deputy governor MK Jain said, handling the full regulatory control of cooperatives to the RBI will strengthen the hands of the regulator.


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KERALA NEWS
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INTERNATIONAL NEWS
Larry King, broadcasting giant for half-century, dies at 87
 Los Angeles, Jan 23 (AP) Larry King, the suspenders-sporting everyman whose broadcast interviews wit
UN: Violence in Sudan's Darfur killed 250, displaced 100,000
At 78 and the oldest president, Biden sees a world changed
Experts: 15 more days to reach trapped China mine workers
NATIONAL NEWS
Delhi Police has given nod to farmers' tractor parade on Jan 26, claim protesting unions
 New Delhi, Jan 23 (PTI) The Delhi Police on Saturday gave permission to protesting farmer unions to
Govt to continue ban on Chinese apps including Tiktok
Rahul Gandhi assures revisiting GST when Cong is voted to power at Centre
SC notice to Centre, others on plea against web series Mirzapur'
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