Page 17 - Banking Finance April 2025

DICGC's claim payouts for the fiscal
year. Under the DICGC Act, the corpo-
ration is required to settle deposit in-
surance claims within 90 days of a bank
being placed under AID. The consis-
tent payout timelines reflect the ongo-
ing stress in the cooperative banking
Ò»©­ Rising Deposit Insurance
sector.

Claims on Co-op Banks
Raise Need for Risk-Based

Premiums
RBI Doubles Small Loan Limits for Urban Co-opera- Deposit insurance claims from coopera-
tive banks nearly doubled to Rs. 1,436
tive Banks crore in FY24, triggering renewed calls
The Reserve Bank of India (RBI) has raised the small-value loan ceiling for for revising deposit insurance limits and
Urban Co-operative Banks (UCBs) from 0.20% to 0.40% of Tier I capital, and introducing a risk-based premium
from Rs. 1 crore to Rs. 3 crore per borrower. UCBs can now allocate up to model. Although DICGC settles these
25% of their total loans towards residential mortgages, up from the earlier claims within 90 days, cooperative
5% limit. Loans outside the priority sector category can also now constitute banks' share of total premiums paid to
up to 25% of total advances. DICGC fell from 6.7% in FY21 to 5.6%
However, exposure to the real estate sector, excluding individual housing in FY24.
loans, remains capped at 5%. Individual housing loan ceilings vary from Rs. With the RBI imposing restrictions on
60 lakh to Rs. 3 crore based on UCB size. New India Cooperative Bank, the de-
bate over deposit protection is again
in focus. RBI Deputy Governor M.
Bill Introduced to Establish like Germany and Kenya, the move aims Rajeshwar Rao has advocated for a
to advance the government's "Sahkar se "periodical upward revision" of the Rs.
National Cooperative Uni- Samriddhi" vision. 5 lakh insurance ceiling and risk-ad-
versity at IRMA justed premiums to bolster the insur-
Union Minister of State for Coopera- DICGC Settled Rs. 1,432 ance fund's sustainability.
tion Krishan Pal Gurjar introduced a bill Crore in Claims for Coop-
in the Lok Sabha to establish the RBI Governor Engages
Tribhuvan Sahkari University as a na- erative Banks in FY24
tional institution. The university will be The Deposit Insurance and Credit with Urban Cooperative
set up on the campus of the Institute Guarantee Corporation (DICGC) Bank Leaders
of Rural Management Anand (IRMA), settled claims worth Rs. 1,432 crore in In his first meeting with urban coop-
Gujarat. FY2023-24, all pertaining to coopera- erative banking (UCB) leaders since
It will offer technical and management tive banks, according to the Reserve taking office, RBI Governor Sanjay
education tailored to the cooperative Bank of India's annual Trend and Malhotra engaged with top executives
sector and promote research and devel- Progress report. These claims covered from leading UCBs at the central bank's
opment. Once passed, IRMA will become cooperative banks placed under liqui- headquarters in Mumbai. Attendees
dation or the RBI's All-Inclusive Direc-
a school within the new university while included chairpersons and CEOs from
tions (AID).
retaining its autonomy and identity. In- prominent cooperative banks such as
spired by similar institutions in countries The settlement marks the entirety of Saraswat, SVC, Cosmos, and Janata

16 | 2025 | APRIL | BANKING FINANCE