MUMBAI: Banks in India will soon pay deposit insurance premiums based on their financial strength, with safer lenders getting a discount and weaker ones continuing to pay the current flat rate, as the Deposit Insurance and Credit Guarantee Corporation (DICGC) rolls out a risk-based premium regime from April.
The federal deposit insurer said the move, finalized in consultation with the Reserve Bank of India (RBI), is designed to encourage sound risk management and ensure that better-run banks pay less than the current flat rate of 12 paise per ₹100 of deposits per year.
Under the risk-based premium (RBP) framework, banks will be assessed on a range of financial metrics including solvency, asset quality, liquidity and profitability, along with non-financial parameters such as corporate governance standards. These include the presence of key management personnel and board or professional directors as mandated by regulators.
Based on the assessment, lenders will be classified into four categories. The best-rated banks will pay ₹8 per ₹100 of insured deposits, while the next two categories will pay ₹10 and ₹11, and the weakest will continue to pay ₹12.
“The DICGC will communicate the risk rating category to the MD/CEO of the insured bank in strict confidence,” it said.
According to DICGC, banks cannot disclose the risk category under any circumstances and shall not be used to solicit any business. Failing to keep this confidential will result in penal actions.
“The RBP framework will be reviewed at least once in three years,” it said.
The RBI had first proposed the move in October 2025, arguing that the existing flat-rate system “does not differentiate between banks based on their soundness and therefore a financially robust bank pays the same insurance rate as a riskier one.”
For depositors, the core protection remains unchanged. The insurance cover of ₹5 lakh per depositor, per bank, including both principal and interest, is not affected by the new premium policy.
