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Q.3 What are the objectives of deposite insurance? Examine the functioning of deposit insurance in India and suggest ways to improve it. (10 Marks)

Mentor’s comment-

  • https://www.thehindu.com/opinion/op-ed/do-we-need-insurance-for-bank-deposits/article38023494.ece
  • In the intro, mention instances of failures of banks and resulting panic in depositors. 
  • In the body mention objective of infusing confidence in depositors and providing stability to the banking system. Next mention DICGC’s role as insurer. In suggestion mention need for risk adjusted model. 
  • Conclude by mentioning the need to implement the changes to change the depositors’ behaviour. 
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