Kamal Ghorui
MUMBAI: Banks will soon price deposit insurance by risk, while depositor protection stays unchanged. From April 1, 2026, RBI will adopt risk-based pricing for deposit insurance, a global norm, without altering coverage or payouts. Until now, all banks paid a flat premium of 12 paise per Rs 100 of deposits, regardless of financial strength. The new framework reverses this. Stronger balance sheets and tighter risk controls will pay less, while weaker banks will pay more. The design rewards prudence. Well-run banks can cut premiums by up to 33% based on risk metrics, with an additional reduction of up to 25% for a long, stress-free contribution record to the insurance fund. Banks with weaker finances or governance will pay closer to, or above, the standard rate, sharpening incentives to improve asset quality and controls.Depositors will see no change. Insurance cover will remain capped at Rs 5 lakh per depositor per bank, with payout rules and timelines unchanged. Banks will be barred from disclosing their risk ratings or premiums, preventing any official classification of banks as safe or risky. Risk assessment will draw on supervisory inputs and indicators covering capital, asset quality, earnings, management and liquidity, with scope for overrides after adverse developments. Some lenders will remain outside the system for now.
