Are Your Bank Deposits Secure? Growing Concerns Amid IndusInd Bank Controversy – News18
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Following the news of financial irregularities at IndusInd Bank depositors are now facing growing concerns; Here’s what you should know
IndusInd Bank Depositors Money Safe?
IndusInd Bank Customer Deposits Safe? Following the news of financial irregularities at IndusInd Bank, shareholders have incurred significant losses, and depositors are now facing growing concerns. The primary worry is whether the bank’s financial troubles will affect their deposits and whether the bank’s financial condition will deteriorate further in the future.
Recent events have highlighted instances where investors were unable to access their deposits due to RBI-imposed restrictions following financial irregularities and regulatory lapses by certain lenders, impacting their financial stability. A notable example is the crisis at Maharashtra Cooperative Bank (PMC Bank), where the RBI restricted depositors from accessing their funds, including fixed deposits, for months due to severe financial issues.
IndusInd Bank’s Financial Troubles
IndusInd Bank has been under pressure due to declining asset quality and increased provisioning for several quarters. The private sector bank’s gross non-performing assets (NPAs) stood at 2.24% in September 2024, compared to 1.92% a year earlier. Both its profitability and capital adequacy ratio have also been on a downward trajectory. The latest issue troubling the bank involves “discrepancies” in some of its portfolios. An internal review has estimated a 2.35% adverse post-tax impact on its net worth as of December 2024. This comes after the RBI instructed banks to conduct a thorough review of their investment portfolios.
The IndusInd Bank saga has reignited concerns over the safety of deposits in the banking sector. The financial irregularities at the bank have only heightened depositors’ anxiety about the broader stability of the banking system.
Are Your Bank Deposits Safe?
Given the current situation, the key question for depositors is whether their hard-earned money in banks is truly safe. Fixed deposits (FDs), which have traditionally been seen as a reliable investment, are now facing renewed scrutiny. Will the trust in FDs remain intact amid such concerns?
Today, safety is a top priority for investors, and for decades, bank FDs have been considered stable and dependable. With fixed returns and minimal risk, FDs have long been the go-to choice for risk-averse investors. But are FDs still as secure as they once were? Let’s explore their benefits and security in more detail.
Why Are Fixed Deposits Considered Safe?
Three key reasons drive people to choose fixed deposits—safety, liquidity, and easy access:
- Safety and Stability: FDs protect your money from market volatility. They are unaffected by stock market fluctuations or changes in interest rates, making them ideal for those who prefer to avoid risk.
- Liquidity Advantage: FDs offer relatively easy access to funds. While premature withdrawals may incur penalties, this option remains available—something not offered by many other investment types.
- Guaranteed Returns: Unlike the fluctuating stock market or other investment instruments, FDs offer predetermined returns. This allows investors to know in advance the amount they will receive at maturity.
Are FDs Still a Safe Option?
If safety is your primary concern, fixed deposits can still be a great investment choice, provided you select a stable and reliable bank.
Government Considers Raising Bank Deposit Insurance Cover
In response to concerns among depositors, reports indicate that the government is considering increasing the deposit insurance cover from Rs 5 lakh. This move is expected to boost confidence in the banking system, particularly among senior citizens and general depositors. However, such an increase may require the Deposit Insurance and Credit Guarantee Corporation (DICGC) to slightly raise its premium charges.
