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    Question

    What is the new deposit insurance premium framework

    approved by the Reserve Bank of India (RBI) to replace the flat-rate system?
    A Fixed-rate premium based on location Correct Answer Incorrect Answer
    B Premium based on bank size Correct Answer Incorrect Answer
    C Risk-based deposit insurance premium Correct Answer Incorrect Answer
    D Deposit insurance premium based on customer type Correct Answer Incorrect Answer
    E Premium based on transaction volume Correct Answer Incorrect Answer

    Solution

    The RBI approved a risk-based deposit insurance premium framework to replace the existing flat-rate system of 12 paise per ₹100 deposit. In this model, banks with lower risk profiles pay lower premiums, while riskier banks pay higher premiums. The aim is to encourage prudent risk-taking and reduce moral hazard.

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