RBI Policy
RBI proposes risk-based premium norms for deposit insurance
This story was originally published at 14:33 IST on 1 October 2025
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MUMBAI – The Reserve Bank of India has proposed to introduce a risk-based premium framework for deposit insurance in India, Governor Sanjay Malhotra said while detailing the outcome of the Monetary Policy Committee's meeting on Wednesday. "It is further proposed to introduce risk-based deposit insurance premium with the currently applicable flat rate of premium as the ceiling," Malhotra said. "This will incentivise sound risk management by banks and reduce premium to be paid by better rated banks." A detailed notification on the matter is expected to be issued soon, and this will be effective from the next financial year.
The RBI's proposal would allow financially sound banks to save significantly on the premium paid. Credit Guarantee Corp. has been operating the deposit insurance scheme since 1962 on a flat rate premium basis. Currently, banks pay a flat rate premium of 12 paise per INR 100 of assessable deposits. While the existing system is simple to understand and administer, it does not differentiate between banks based on their soundness, the RBI said.
In a unanimous decision Wednesday, the rate-setting panel left the policy repo rate unchanged at 5.50%. It also retained its 'neutral' policy stance. Malhotra noted that the decision was a fallout of the inflation outlook turning out to be more benign than previously projected. End
Reported by Vaishali Tyagi
Edited by Avishek Dutta
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