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RBI welcomes suggestions on Differential Premium for Banks in India report

Wed, Sep 30, 2015, 09:04 PM
New Delhi, Sep 30 : The Reserve Bank of India (RBI) on Wednesday welcomed comments and suggestions on the Report of the Committee on Differential Premium System for Banks in India after placing the report on its official website.

"Comments and suggestions on the report may please be forwarded by October 31... In India, specified deposits of commercial banks, Regional Rural Banks (RRBS), Local Area Banks (LABs) and co-operative banks are covered under deposit insurance by the Deposit Insurance and Credit Guarantee Corporation (DICGC)," the apex bank said.

According to a bank statement, the primary objective of most Differential Premium Systems (DPS) has been to provide incentives to banks to avoid excessive risk taking, minimise moral hazard and introduce more fairness into the premium assessment process.

"Introducing fairness into the system bolsters industry support for deposit insurance. Keeping this perspective in mind, there has been an increasing recognition among the deposit insurance agencies around the world about the need for introduction of a DPS based on the risk profile of banks," it said.

The Committee on Differential Premium System for Banks in India was constituted in March 2015 to make recommendations for the introduction of risk based premium in India.

The committee submitted the report to the chairman of the Corporation on September 7.
Agency: IANS

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