India, April 5 -- In a move to safeguard the financial interests of depositors in cooperative credit societies, the state cooperation department has initiated a plan to introduce 'deposit insurance' by roping in insurance companies. The proposal aims to cover the risk of loss of deposits across 19,948 cooperative credit societies in the state, which collectively hold deposits exceeding Rs.90,500 crore, largely from rural areas.

The decision comes in the wake of rising concerns over societies going into liquidation and instances of deposit losses due to frauds. To address this, the department has invited expressions of interest from insurance companies to provide deposit insurance to depositors. Under the proposed model, insurance compani...