Last Updated on February 1, 2021 at 2:42 pm
Finance Bill 2021 has extended the provisions of the five lakh deposit insurance. Earlier it applies to only banks that went bust (liquidation). From 1st April 2021, the insurance will also apply to banks placed under temporary restrictions by the RBI.
Investors can redeem up to Rs. five lakh from banks under stress. This may reduce unfortunates incidents like death/suicides seen after such episodes: PMC Bank Fraud: Lessons from Sanjay Gulati’s story.
This does not mean investors should take a risk by investing in banks that offers high-interest rates. Read more: Why deposit insurance of five lakhs is not enough to protect investors