**Executive Summary**
This press release, dated February 06, 2026, announces the implementation of a Risk-Based Premium (RBP) framework for deposit insurance in India by the Deposit Insurance and Credit Guarantee Corporation (DICGC), with approval from the Reserve Bank of India (RBI). The framework aims to incentivize sound risk management by banks and reduce premiums for better-rated banks. The RBP framework is effective from April 1, 2026, and will be reviewed at least once in three years.
**Key Points / Main Content**
* **Risk Assessment Models:**
* Two risk assessment models: Tier 1 (for Scheduled Commercial Banks other than RRBs) and Tier 2 (for RRBs and cooperative banks).
* Tier 1 based on supervisory ratings, quantitative assessment (CAMELS parameters), and potential loss to the Deposit Insurance Fund (DIF).
* Tier 2 based on quantitative assessment (CAMELS parameters) and potential loss to DIF.
* **Incentives:**
* Maximum Risk_model_incentive shall be 33.33% over the card rate.
* Maximum Vintage_incentive of up to 25% for longer contribution to DICGC's Deposit Insurance Fund without major distress or claim payouts.
* **Premium Calculation:**
* Effective Rate = Card Rate * (1 - Risk_model_incentive) * (1 - Vintage_incentive)
* **Additional Provisions:**
* A rating override policy in case of adverse material information/development.
* Banks must maintain confidentiality of ratings and premium amounts.
* Local Area Banks (LABs) and Payments Banks (PBs) will continue to pay the premium at card rate (12 paise per ₹100 of AD per annum).
* All UCBs under the Supervisory Action Framework (SAF)/Prompt Corrective Action (PCA) of RBI will continue to pay the card rate of 12 paise and will be considered for RBP from the financial year following the year in which the bank exits SAF/PCA.
* **Background:**
* DICGC has been operating deposit insurance since 1962 on a flat rate premium system.
* DICGC Act, 1961 [Section 15(1)] provides for differential premium rates for different categories of insured banks.
* The Central Board of RBI approved this RBP proposal on December 19, 2025.
**Impact Analysis**
* **Banks:**
**Impact**
* Change in premium rates based on risk assessment and vintage.
* Need to maintain confidentiality of ratings and premium amounts.
**Action Required**
* Understand the risk assessment models and their impact on premium rates.
* Comply with the confidentiality requirements for ratings and premium amounts.
* **DICGC:**
**Impact**
* Implementation of a more sophisticated risk-based premium system.
* Potential for reduced payouts due to incentivized risk management.
**Action Required**
* Administer and monitor the RBP framework.
* Apply rating override policy when necessary.
* **RBI:**
**Impact**
* Oversight of the DICGC's implementation of the RBP framework.
* Continued monitoring of banks' risk profiles.
**Action Required**
* Provide guidance and support to DICGC as needed.
Key Entities Referenced
Risk Based Premium (RBP) framework: Framework to incentivize sound risk management by banks and reduce premium to be paid by better rated banks for deposit insurance.
Deposit Insurance and Credit Guarantee Corporation (DICGC): Responsible for implementing the RBP framework for deposit insurance.
Reserve Bank of India (RBI): Regulator whose approval is required for DICGC’s risk-based premium framework and whose Central Board approved the proposal to introduce RBP.
DICGC Act, 1961: The legal basis (Section 15(1)) providing for differential premium rates for different categories of insured banks.
Statement on Developmental and Regulatory Policies dated October 01, 2025: Announcement that initiated the development and implementation of the risk-based premium framework.
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
वेबसाइट
:
www.rbi.org.in/hindi
संचार वर्भाग, केंद्रीय कायाालय, शहीद भगत ससिंह मागा, फोटा, म िंबई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
February 06, 2026
Risk-based Premium Framework for Deposit Insurance in India
In pursuance of the announcement made in the Statement on Developmental and
Regulatory Policies dated October 01, 2025, Deposit Insurance and Credit
Guarantee Corporation (DICGC), with approval of Reserve Bank of India (RBI), has
today advised the insured banks on implementation of Risk Based Premium (RBP)
framework. The framework aims to incentivise sound risk management by banks and
reduce premium to be paid by better rated banks.
Background: DICGC has been operating the deposit insurance since 1962 on a flat
rate premium system [presently 12 paise per ₹100 of assessable deposits (AD)]. Flat
rate premium system is simple to understand and administer but does not
differentiate banks which manage the risks better. DICGC Act, 1961 [Section 15(1)]
provides for differential premium rates for different categories of insured banks. The
proposal to introduce RBP for deposit insurance has been approved by the Central
Board of RBI on December 19, 2025.
Salient features of the RBP framework are as under:
• There shall be two risk assessment models – Tier 1 Model and Tier 2 Model.
Tier 1 Model is applicable to Scheduled Commercial Banks other than
Regional Rural Banks (RRBs), and based on supervisory ratings, quantitative
assessment (CAMELS parameters) and potential loss to Deposit Insurance
Fund (DIF) in case of failure of insured banks.
• Tier 2 Model, applicable to RRBs and cooperative banks is based on
quantitative assessment (CAMELS parameters) and potential loss to DIF in
case of failure of insured banks.
• The maximum Risk_model_incentive shall be 33.33% over the card rate.
• Additionally, the RBP framework also provides benefits of vintage (signifying
longer contribution to DICGC’s Deposit Insurance Fund without any major
distress or claim payouts from DICGC). Maximum Vintage_incentive of upto
25% shall be provided.
• The effective rate of premium therefore will be calculated, as under:
• The framework envisages a rating override policy in case of adverse material
information/development, subsequent to the initial risk rating.
• The banks will be required to maintain confidentiality of ratings and not to
disclose ratings or amount of premium paid to DICGC.2
• Local Area Bank (LABs) and Payments Banks (PBs) will continue to pay the
premium at card rate (i.e., 12 paise per ₹100 of AD per annum) as there are
data point limitations to bring them into a RBP model (they account for less
than 1% of the premium collected).
• All UCBs under the Supervisory Action Framework (SAF)/Prompt Corrective
Action (PCA) of RBI will continue to pay the card rate of 12 paise and will be
considered for RBP from the financial year following the year in which the
bank exits SAF/PCA.
• The RBP framework shall be effective from April 1, 2026 and will be reviewed
at least once in three years.
(Brij Raj)
Press Release: 2025-2026/2067 Chief General Manager