Page 5 - Insurance Times August 2018
P. 5
General Insurance
News
Hindustan Aeronautics Centre not to hike deposit insurance cover
Limited makes Rs. 273-cr
The Union government has no plans to As on March 31, 92 per cent accounts
insurance claim increase the existing insurance cover of and 29 per cent deposits in terms of
Rs 100,000 for bank deposits. The Cen- value were insured by the DICGC, the
HAL has filed an insurance claim of tre has turned down a request from latest data showed. This was higher
Rs 273 crore Andhra Pradesh Chief Minister than the guidance provided by the
on an under- Chandrababu Naidu who suggested an IADI.
production increase in deposit insurance cover to
Sukhoi jet that Rs 1.5 million in a let- “An increase in the insurance cover
recently ter to then finance also requires a higher
minister Arun Jaitley premium based on
crashed during its test flight near in May. risk classification of
Nashik. This is the first of its kind in- the insured bank,” ac-
surance claim involving a fighter jet At present, all depos- cording to the finance
in India. its up to Rs 100,000 ministry. Naidu, how-
are insured by the ever, recommended
The claim was filed with a group of Deposit Insurance and ensuring that the
re-insurers led by GIC Re and sole Credit Guarantee Corporation (DICGC).
insurer New India Assurance. higher premium amount, as a result of
The finance ministry examined Naidu’s the insurance limit hike, was borne by
Though usually defence and military proposal after consulting the DICGC, a banks and the charges were not passed
projects and materials are not in- subsidiary of the Reserve Bank of India on to customers.
sured, HAL has insured the Sukhois (RBI) that guarantees depositors’
as they were in under-production money. The ministry felt that the cur- The deposit insurance covers all com-
stage and these jets are yet to be rent limit was in line with international mercial banks, local area banks, re-
inducted into Indian Air Force, said standards, according to which at least gional rural banks and co-operative
an NIA official. 80 per cent of depositors and 20-30 banks. In case a bank fails, the DICGC
per cent of deposits amount should be pays the insured amount to the deposi-
The insurance cover is valid only till insured. tor.
the aircraft is handed over to the Air
Force in view of the security issues “As per the Core Principle (CP) 8 of Ef- The insurance cover for bank deposits
after induction. During 2017-18, NIA fective Deposit Insurance prescribed was last revised in May 1993 to Rs
was the sole primary insurer for the by the International Association for 100,000 from Rs 30,000 earlier, after
Sukhoi project with a total sum as- Deposit Insurance (IADI), coverage a gap of 13 years. In March 1993,
sured of Rs 11,240 crore. should be limited, credible and cover 95.80 per cent bank accounts and
the vast majority of depositors but 67.30 per cent bank deposits in value
HAL has paid a premium of around leave a substantial amount of deposits terms were insured.
Rs 18-19 crore during the year and exposed to market discipline,” the
may have to shell out 20 per cent DICGC informed the ministry. Jaitley said in January that the govern-
higher premium next year due to the ment was open to the idea of raising
Nashik claim, officials said. the deposit insurance limit from Rs
100,000.
The Insurance Times, August 2018 5
