Explain the concept of deposit insurance.
Ans. Deposit insurance is a scheme whereby the government run institutions takes the guarantee of compensating the depositors of a bank in case the bank fails. Its aim is to increase the confidence level of people on banking system. In the absence of such insurance, people will never be willing to keep their hard earned money with the banks. It was introduced first in USA in 1934 and then in India in 1962.
No comments:
Post a Comment