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Government Considering Increasing Insurance Cover on Bank Deposits; May Ease Restrictions on FDI By JVs of Indian Companies

Professor of Financial Economics and Part-time Value Investor, Transfin.
Nov 18, 2019 10:58 AM 2 min read

Government mulls increasing insurance cover on bank deposits. May ease restrictions on FDI by JVs of Indian companies.



Government considering increasing insurance cover on bank deposits.  

Hope For Better Tomorrow: The government is considering increasing the insurance cover on bank deposits from the current INR1L to anywhere between INR2L - INR3L under a modified Financial Resolution and Deposit Insurance (FRDI) law. 


The news comes at a time when customers of fraud-hit Punjab and Maharashtra Co-operative (PMC) Bank have been demanding their money back, other than lifting the daily withdrawal curbs. 


Good to Know: The government has kept the deposit cover unchanged at INR1L since May 1993, when it was raised from INR30,000 after the security scam in 1992 had led to the liquidation of Bank of Karad in Maharashtra. Financial Express

Govt may ease restrictions on FDI by JVs of Indian companies.

Easing Up: The government may soon ease restrictions on foreign direct investment (FDI) by joint ventures (JVs) or wholly-owned subsidiaries (WOS) of an Indian company without categorising such investments as "suspect" involving 'round tripping' of funds.


The move is perhaps an attempt to ease the flow of foreign funds into legitimate business activities.


Digging Deeper: The existing legal framework under FEMA does not permit FDI by an overseas JV or WOS of an Indian party without the prior approval of RBI. Similarly, there are restrictions on Indian entities to undertake overseas direct investment (ODI) in a foreign entity which already has existing FDI investment structures in India. Livemint


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