The Reserve Bank of India (RBI) on February 06, 2026, issued a circular regarding the Risk-based Premium Framework for Deposit Insurance in India.
In line with the Statement on Developmental and Regulatory Policies dated October 01, 2025, the Deposit Insurance and Credit Guarantee Corporation (DICGC), with RBI approval, has introduced a Risk-Based Premium (RBP) framework for deposit insurance. The framework replaces the long-standing flat premium system (currently 12 paise per ₹100 of assessable deposits) to incentivise better risk management by banks. The move is enabled under Section 15(1) of the DICGC Act, 1961, and was approved by the RBI Central Board on December 19, 2025.
Under the RBP framework, banks will be assessed through two models. The Tier 1 Model applies to Scheduled Commercial Banks (excluding RRBs) and is based on supervisory ratings, CAMELS-based quantitative parameters, and potential loss to the Deposit Insurance Fund (DIF). The Tier 2 Model, applicable to RRBs and cooperative banks, relies on CAMELS parameters and potential loss to DIF. Banks can receive a risk-based incentive of up to 33.33% over the card rate, along with a vintage incentive of up to 25% for long-standing, stable contribution to the DIF, subject to conditions.
The framework also provides for rating overrides in case of adverse developments and mandates confidentiality of ratings and premium amounts. Local Area Banks and Payments Banks will continue to pay the card rate due to data limitations. Urban Cooperative Banks under SAF/PCA will also pay the card rate and will be considered for RBP only after exiting such frameworks. The RBP framework will be effective from April 1, 2026, and will be reviewed at least once every three years.
[Press Release: 2025-2026/2067]
