PTI New Delhi

A hike in insurance limit on bank deposits above Rs 5 lakh is expected to have a "marginal but notable" impact on lenders' profit, rating agency Icra said on Wednesday. At present, deposits up to Rs 5 lakh by an individual customer is covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC), which collects premiums from banks for protecting customers' money in case a lender goes down.

Department of Financial Services Secretary M Nagaraju has recently said that the government is "actively considering" raising the deposit insurance limit beyond the current Rs 5 lakh. "The point about increasing insurance... that is under active consideration. As and when the government approves, we will notify it," Nagaraju told reporters on February 17 at a press conference in the presence of Finance Minister Nirmala Sitharaman.

Nagaraju's comments came on the heels of a scam in the New India Co-operative Bank, which triggered RBI measures prohibiting the bank from issuing new loans, suspending deposit withdrawals and superseding the lender's board.