HDFC Bank clarifies as image of passbook with deposit insurance stamp goes viralhttps://indianexpress.com/article/business/banking-and-finance/hdfc-clarifies-as-image-of-passbook-over-deposit-insurnace-cover-goes-viral-6072333/

HDFC Bank clarifies as image of passbook with deposit insurance stamp goes viral

Issuing a clarification, HDFC Bank said the information was not new and had been inserted as per a June 22, 2017 RBI circular.

The image of the passbook that is doing rounds on social media.

Leading private sector bank HDFC Wednesday issued a clarification with reference to an image of a passbook bearing a stamp of deposit insurance cover being circulated on social media that seems to have caused concern among customers. The image doing the rounds of social media shows an HDFC passbook with a stamp saying deposits in the bank up to Rs 1 lakh is insured.

“The deposits of the bank are insured with DICGC and in case of liquidation of the bank, DICGC is liable to pay each of the depositors through the liquidator. The amount of this deposit is up to Rs 1 lakh within 2 months from the date of claim list from the liquidator,” the stamp read.

Issuing a clarification, HDFC Bank said the information was not new and had been inserted as per a June 22, 2017 RBI circular.

“This pertains to information about the deposit insurance cover. We would like to clarify that the information has been inserted as per RBI circular dated June 22, 2017 which requires all Scheduled Commercial Banks, all Small Finance Banks and Payment Banks to incorporate information about ‘deposit insurance cover’ along with the limit of coverage upfront in the passbook,” the bank said in a statement.

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The failure of Punjab and Maharashtra Co-operative (PMC) Bank has reignited the debate on the low level of insurance coverage for deposits held by the public in banks. In an event of a bank going bust in India, depositors get a maximum of Rs 1 lakh per account as insurance cover, even if their deposits far exceed Rs 1 lakh.

While depositors holding less than Rs 1 lakh of deposits in a bank are covered by the deposit insurance, depositors holding more than Rs 1 lakh in an account have no legal remedy in case of the collapse of a bank.

Currently, the Deposit Insurance and Credit Guarantee Corporation (DICGC) — a fully owned subsidiary of the Reserve Bank of India — provides for cover of Rs 1 lakh per depositor for deposits in commercial banks, regional rural banks, local area banks (LABs) and cooperative banks, and rest of the deposit amount is forfeited in the rare event of a bank failure.