Finance Minister Nirmala Sitharaman proposed to increase the insurance cover for bank depositors to Rs 5 lakh from the existing Rs 1 lakh. The existing Reserve Bank of India rules stipulate that in case of a bank failure, each depositor is insured up to a maximum of Rs 1 lakh for both principal and interest amount. The cover of Rs 1 lakh is irrespective of the deposit held by the customer in the savings or fixed deposit account and has been in force since 1993, when the cover was raised from Rs 30,000 to Rs 1 lakh.
