HDFC Bank passbook with deposit insurance stamp, raises many questions

India's one of the finest 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.

This loud and clear message has created a sensation on how the Indian banking system is moving towards negative growth and the question comes on which bank is to trust and if just Rs.1 lakh is secure in the bank, in case of any probable liquidity, what and how one has to keep their rest of the savings, either by Fixed deposit or any format.Expert says, you can withdraw ur money,However, there would be security issue.

“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 Jane 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.

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.