Deposit Insurance ( FDIS)

Demand for Deposit Insurance

Federal deposit insurance Corporation shortly called as FDIC is a separate entity which was evolved to create confidence among the public. This is managed by a five member directors appointed directly by the President. While the world is in a recession period, arise of current financial problems in US and also some of the big names in financial arena are suffering heavy loss can’t able to pay back to the people has created a panic among the people. To solve this crisis and to give more confidence to the public, FDIC comes to play an important role, by giving more confidence to the banks and provides an additional security to the depositors with an insurance coverage of USD 1, 00,000.

From October 8th 2008 to Dec 2009) this has been temporarily increased up to 2, 50,000$. FDIC extends its coverage to all national and state banks in US.

From Now, people having a bank account don’t have to worry because your money is protected by federal deposit Insurance Corporation, there is another entity called National Credit Union Administration (NCUA), this protects the credit union account holders.

Why Deposit insurance is needed?

Deposit Insurance is the ideal choice for the government to help the public secure their money in this recession period where big financial institutions tumble down.

Generally Banks improvise their funds through loans, When bank lend loans it’s the duty for the borrower to repay it on the right time, if many of the borrowers not going to return the loan payment on time, it’s going to be a big problem for the banks to get proper money circulation and return back the deposits this is what literally happening currently.