This refers to “Beyond deposit insurance” (November 19). The move to raise deposit insurance limit from Rs 1 lakh to Rs 5 lakh, besides the new scheme under consideration for covering wholesale deposits up to Rs 25 lakh should offer adequate protection to retail depositors. Retirees are the most vulnerable section, who invest their hard-earned terminal benefits in neighbourhood cooperative banks, lured by the higher rates of interests offered by them, only to be left in the lurch when these entities fold up for reasons unknown. Senior citizens cannot spread their investments in different banks as monitoring the same and filing their annual IT returns can be cumbersome. To them, the moves under consideration will certainly come as a boon.
Having said that, there is also an urgent need to introduce reforms in the functioning of cooperative banks by bringing them under the exclusive oversight of the Reserve Bank of India (RBI). Sectors such as real estate also need to be taken out of their ambit of lending so that they serve the purpose for which they were set up, — namely, to extend credit to agriculturists, small borrowers and businesses. Above all, the RBI’s supervision of banks too needs to be much more proactive.
V Jayaraman Chennai
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