The proportion of bank deposits in India covered by insurance has slipped below 40% in value terms for the fiscal year 2026, according to data reported by The Hindu Businessline.
The figure marks a significant contraction in the safety net available to retail depositors, even as the Deposit Insurance and Credit Guarantee Corporation (DICGC) maintains its coverage limit of ₹5 lakh per depositor per bank, including accrued interest.
The decline in insured share comes against a backdrop of ongoing stress in the cooperative banking sector, where several institutions have faced crises in recent years.
While the absolute number of protected accounts may remain high, the value-based metric suggests that a growing portion of total deposits is concentrated in larger balances or institutions where the insurance cap offers limited protection relative to the total exposure.
This development underscores the fragility of the deposit insurance framework in a banking system where large-value deposits are increasingly common.
For investors and market participants, the data points to potential systemic vulnerabilities, particularly in smaller banks and cooperatives that may lack the capital buffers to absorb shocks without triggering depositor panic.