Do we need insurance for bank deposits?

At an event last week to mark the payment of over ₹1,300 crore to depositors in troubled cooperative banks, Prime Minister Narendra Modi flaunted his government’s revamped deposit insurance scheme. The scheme, which was upgraded through the Deposit Insurance and Credit Guarantee Corporation (DICGC) Amendment Bill, 2021, guarantees to compensate depositors up to a limit of ₹5 lakh within a period of 90 days from when a bank fails. At the same event, the Reserve Bank of India (RBI) Governor Shaktikanta Das warned depositors to be careful and avoid investing in risky banks just because they offer higher returns.

Here we discuss whether we need insurance for bank deposits.

Guests: Amol Agrawal is Assistant Professor of Economics at Ahmedabad University; Amiyatosh Purnanandam is Professor of Finance at the University of Michigan

Host: Prashanth Perumal J.

Read the Parley article here .