Insuring deposits, ensuring stability: A critical evaluation of six decades of deposit insurance in the Indian banking sector
Abstract
The deposit insurance system in India is one of the oldest in the world. Though deposit insurance is a well-researched area across the globe, it is relatively unexplored in India. This paper aims to critically evaluate some of the core aspects of the Indian deposit insurer, explicate the strengths and weaknesses of the system, highlight the risks that accrue to the system due to its features and the lessons learned from its 60 years of experience. The study suggests that the Indian deposit insurance system is marred by certain issues, such as irregular revisions of coverage limits, cross-subsidisation, delays in the recovery of settled claims, the restricted role of the insurer and the non-availability of a benchmark for the insurance fund. It further provides policy recommendations for practitioners to overcome these shortcomings and enhance the robustness of the deposit insurer by allowing better risk management under the scheme.
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Author's Biography
Varda Sardana is an assistant professor at the Jaipuria Institute of Management in Noida. She is also a doctoral researcher at the Department of Commerce at the University of Delhi. Her academic and research interests include banking, finance, corporate governance, sustainability and corporate social responsibility.
Shubham Singhania is an assistant professor at the Jaipuria Institute of Management, Jaipur. He has published more than 20 research papers in Scopus-indexed and Australian Business Deans Council-listed journals and serves as a reviewer for many editorials. His areas of interest include corporate governance, gender diversity, risk management, finance and sustainability.
Citation
Sardana, Varda and Singhania, Shubham (2024, March 1). Insuring deposits, ensuring stability: A critical evaluation of six decades of deposit insurance in the Indian banking sector. In the Journal of Risk Management in Financial Institutions, Volume 17, Issue 2. https://doi.org/10.69554/FLOV6280.
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