History of Deposit insurance in India: The insurance coverage needs to be raised

My piece in moneycontrol.com tracing history of Deposit Insurance in India.

It’s much easier to define financial or banking instability than stability. A strong pointer of banking instability is whether deposit insurance is becoming part of the public narrative. If so, it means people are worried about safety of their deposits.

The PMC (Punjab and Maharashtra Co-operative) Bank case and a string of banking frauds have highlighted the matter like never before. The worries are taking hold as rumour mills are working overtime on WhatsApp and the social media. To be fair, the Reserve Bank (RBI) and the government have taken some steps to dispel the fears.

All said and done, people get the signals. It’s not without reasons that historians say crisis related to banking, and that too on public deposits, is one of the toughest to resolve.

This piece reviews the history of deposit insurance in India to make sense of the issues plaguing the system.