Deposit Insurance Fund Crosses ₹2.6 Lakh Crore as RBI Rolls Out Risk-Based Premiums for Banks
India’s Deposit Insurance Fund grew 14.4% to ₹2.62 lakh crore in FY26, with 97.4% of bank accounts now fully covered under the ₹5 lakh insurance limit
Deposit insurance: RBI's Financial Stability Report shows India's Deposit Insurance Fund grew to ₹2.62 lakh crore in FY26, with 97.4% of deposit accounts f
New Delhi: India’s Deposit Insurance Fund (DIF), the safety net that protects bank depositors’ money, grew 14.4 per cent year-on-year to reach ₹2.62 lakh crore as on March 31, 2026, according to the Reserve Bank of India’s Financial Stability Report (FSR) for June 2026, which draws on data from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
The reserve ratio — the proportion of the fund to total insured deposits — improved to 2.39 per cent, up from 2.29 per cent a year earlier, indicating a stronger cushion relative to the deposits the fund is obligated to cover in the event of a bank failure.
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Deposit Insurance: 97.4% of accounts now fully covered
As on March 31, 2026, 1,950 banks were registered with the DICGC, comprising 124 commercial banks — including 11 small finance banks, 6 payment banks, 28 regional rural banks and 2 local area banks — and 1,826 co-operative banks.
With the current deposit insurance limit of ₹5 lakh per depositor per bank, 97.4 per cent of all deposit accounts in the country, amounting to 301.4 crore accounts, were fully insured as on March 31, 2026. In value terms, however, only 39.7 per cent of total assessable deposits of ₹275 lakh crore were covered under insurance, reflecting how the flat ₹5 lakh limit protects the vast majority of account holders by number, even as it covers a smaller share of the system’s total deposit value, which is concentrated in larger accounts.
Co-operative banks had a notably higher insured deposit ratio at 60.1 per cent compared with 38.6 per cent for commercial banks, the report said, with public sector banks recording a higher ratio than private banks within the commercial banking category.
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Deposit Insurance: Bank-wise coverage varies sharply
A closer look at the RBI report’s bank group-wise breakup shows how insurance coverage differs widely across categories of banks. Payment banks had the highest insured deposit ratio at 99.5 per cent as on March 31, 2026, followed by regional rural banks (RRBs) at 79 per cent — reflecting the smaller, more retail-heavy deposit base typical of these institutions. Public sector banks stood at 44.7 per cent, ahead of private banks at 30.6 per cent, while foreign banks had the lowest ratio among commercial banks at just 4 per cent, since their deposit books are dominated by large corporate and institutional accounts that fall well above the ₹5 lakh insurance threshold.
Among co-operative banks, urban co-operative banks (UCBs) had a 62.5 per cent insured deposit ratio, while district central co-operative banks (DCCBs) stood at 62.9 per cent — both comfortably higher than the commercial banking average, underlining how deposit insurance offers proportionately deeper protection to depositors in smaller, more localised banking institutions.
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Deposit Insurance: Premium collections rise 14%
Deposit insurance premium received by the DICGC grew 14.1 per cent year-on-year to ₹15,565 crore during the second half of 2025-26, with commercial banks accounting for 95.1 per cent of this collection. For the full year, total premium collections stood at ₹29,947 crore, up from ₹26,764 crore in 2024-25.
Deposit Insurance: A shift to risk-based pricing
In a structural change to how deposit insurance is priced, the DICGC — with RBI’s approval — has introduced a Risk-Based Premium (RBP) Framework under Section 15(1) of the DICGC Act, 1961, replacing the earlier practice of charging all insured banks a uniform premium of 12 paise per ₹100 of assessable deposits, regardless of their risk profile.
Under the new framework, banks are assessed using a two-tier methodology — one for Tier 1 banks (Scheduled Commercial Banks, excluding Regional Rural Banks) and another for Tier 2 banks (Regional Rural Banks, Rural Co-operative Banks and Urban Co-operative Banks). The framework also includes a “vintage discount” mechanism that rewards banks with a sustained track record of contributing to the DIF without triggering any insurance claim payouts.
The practical effect, per the RBI report, is that better-managed, lower-risk banks will now pay lower premiums than the earlier uniform rate, while weaker banks may face relatively higher charges — aligning the cost of deposit insurance more closely with the actual risk each bank poses to the fund, and strengthening incentives for sound governance and prudent risk management across the banking sector.
