New Delhi, Feb. 21 -- The government is "actively considering" a hike in India's deposit insurance limit beyond the current Rs.5 lakh, according to M. Nagaraju, secretary, department of financial services.

This comment, made soon after the Mumbai-based New India Cooperative Bank was placed under a moratorium by the Reserve Bank of India (RBI), rakes up the issue of deposit insurance again. It was last raised when Punjab and Maharashtra Cooperative (PMC) Bank failed in 2019 and the Centre responded by raising the insurance cover from Rs.1 lakh to Rs.5 lakh per deposit.

Bank failures are few and far between in India, thanks to state ownership of a large chunk of the sector and prompt action by its regulator, RBI. However, as the New India...