InvestorQ : What will be the impact of the banks hiking deposit insurance on the bank stocks? Will it be a major cost on them?
Dia Deshpande made post

What will be the impact of the banks hiking deposit insurance on the bank stocks? Will it be a major cost on them?

Answer
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Ria Jain answered.
7 months ago


The guarantee given on the deposits has been raised from Rs.1 lakh per depositor to Rs.5 lakh per depositor, which is in line with the rising deposit levels as the 1 lakh limit was set long back and has not been changed since. This is unlikely to hit the banks in a big way because the insurance cover is provided by the Deposit Insurance and Credit Guarantee Corporation and is backed by the government. Hence for the banks, the net impact will not be much. On the other hand, it is likely to make bank deposits more attractive due to this assurance compared to other similar instruments.