MUMBAI, Feb. 6 -- 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 Rs.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 profitab...