The Daily Brief What happens if your bank fails?
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Feb 25, 2025 Explore the critical role of deposit insurance in bolstering trust in India's banking system, especially amid fears of bank failures. Dive into the alarming economic impacts of air pollution, which affects labor productivity and agriculture costs. Discover how pollution not only diminishes crop yields but also threatens overall economic growth. The discussion emphasizes the urgent need for addressing environmental challenges while navigating the complexities of India’s evolving market landscape.
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The Importance of Trust in Banking
- Banks operate on trust, enabling them to manage capital and facilitate various operations.
- Loss of trust, due to any reason, can trigger bank runs, jeopardizing the entire system.
Deposit Insurance: A Safety Net
- Deposit insurance is a safety net, promising a portion of savings even if a bank fails.
- This insurance, managed by entities like India's DICGC, is crucial for maintaining trust and stability.
Evolution and Coverage of Deposit Insurance in India
- India's deposit insurance, starting in 1962, has evolved, covering up to ₹5 lakh per depositor per bank.
- While covering most accounts by headcount, the insured amount is under half the total deposits.