Suggestion to Finance minister to give full Insurance Cover to deposit holders in Banks.

SMALL INVESTORS FORUM

A7/303, Saket CHS LTD., Thane (W) 400601

November 19, 2019.

Sub: Suggestion to give full Insurance Cover to deposit holders in Banks.

Respected Madam,

It is Good news that the Govt plans to increase the Deposit Insurance Cover for depositors in Banks from Rs.1 Lakh.  

However, how much will it be ? It may be increased from Rs.1 lakh to Rs.3 lakhs or Rs.5 lakhs - but what above that? 

Today, Senior citizens and Co-operative housing societies,  Co-operative Credit societies are depositing lakhs of rupees in Co-operative banks to get more interest. 

What would they do if system again went wrong?

Our suggestions are us under:

(These have been arrived at after discussing with experts)

1. IRDA should come out with a Deposit linked Insurance product with no cap.

2. Under this, every rupee put in Fixed Deposit will get Insurance cover on a minimum yearly premium. 

The tariff of the rate or premium can be decided by the Government and Insurance companies.

3. Under this cover, the moment a Co- operative bank is declared as failed  by RBI, all the money in Fixed Deposits will be safe guarded and the concerned Insurance company will pay the full claim to depositors and that too 100%.

4. Under this scheme, all depositors will have to give Letter of Subrogation to the Insurance company.

5. Subrogation is a term describing a legal right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured. This is done in order to recover the amount of the claim paid by the insurance carrier to the insured for the loss.

5. Under this letter of Subrogation, Insurance company will fight legal battle with the concerned bank which has failed and recover their money.

6. This scheme will generate more money, business to the Insurance company, tax to the Government of India and more important confidence of small investors. 

Co-operatives will become more strong. 

Today lot of Housing and Credit co-operative societies have passed a resolution to withdraw Fixed Deposits kept in Co-operative banks and shift to Government Banks. This is due to loss of confidence.

7. All that will change. This can become a game changer in coming days.

8. Finance Ministry can ask IRDA to prepare this scheme.

For every one lakh, if the rate of premium is Rs.200/- also, yearly funds collected will be in millions. 

For every Rs.1000, Rs.0.20 can be the premium. And it may be charged to the deposit holder.

This will restore trust of the deposit holders in the banking system and create a win-win situation for all the stake holders.

We request your intervention and positive decision in this matter.

Regards,

For Small Investors Forum,

Dayanand Nene.                       Amit Sawant

President.                                  Vice President

# 8879528575

The Hon. Finance Minister,

Govt of India,

North Block,

New Delhi 110 001.