Increase DICGC Limit to Rs 6 lakhs to adhere to Budget wef 1-4-19 on limit of TDS on interest 40,000

In this year's Budget, the limit for deduction of TDS on Interest u/s 194A has been increased to Rs 40,000 from Rs 10,000 earlier (prevalent for more than a decade). Now at a current interest rate of 7.00 %, a person has to invest minimum Rs 5,70,000 to earn Rs 40,000 per annum to avail maximum tax benefit. To boost investor confidence, the DICGC limit should be increased to Rs 6 lakhs to cover the principal and interest. Each depositor in a bank is insured for both principal and interest amount held by him in the same capacity and same right as on the date of liquidation /cancellation of bank's licence or the date on which the scheme of amalgamation /merger /reconstruction comes into force.The DICGC Insurance amount is presently upto a maximum of Rs.1,00,000 (Rupees One Lakh) only per depositor.

Cost of living has increased considerably over the years. As interest rates have plummeted sharply over the last 3 years, the common man has to invest more in Bank fixed deposits (FD's) to earn the targeted fixed income to meet his daily expenses. Consequently, the investment amount in Bank FD's has increased considerably over the years. There is an open risk for the depositor as the insurance amount is Rs 100000 only per depositor. This amount needs to be augmented to Rs 600000 per depositor on priority as this will instill confidence in the common man that his hard earned money is safe in the case of an unfortunate event of liquidation of the bank.

With the growing incidence of NPA's in banks and the defaults by eminent personalities, the Centre should dispel the element of fear in the minds of the common man by increasing the DICGC Insurance amount upto a maximum of Rs.6,00,000 (Rupees Six Lakhs) per depositor immediately.

This will also breathe a fresh impetus in the economy and will boost the investment climate more