Insurance of Bank Deposits: Some Issues

Abstract

Bank deposit insurance is different from other insurance business. Apart from protecting individual’s asset it has a broader perspective, i.e., ensuring country’s financial stability. International authorities strongly advocate for installing DI system in each and every country. It has some features which are unique to this type of insurance and has made its design a complicated task. IMF has developed some basic guidelines which need to be followed before installing a DI system. India has a DI system but its function has been limited so far as majority of the banks enjoy implicit guarantee. In the emerging privatised era the DICs will have to play a more significant role.