Mumbai, Oct. 2 -- The central bank on Wednesday proposed a new model of deposit insurance, where safer banks will pay less premiums while weaker ones pay relatively more. The risk-based model would be a departure from the current practice, where banks pay a uniform 12 paise for every Rs.100 of deposits. The shift from the decades-old flat-rate system is designed to incentivize sound financial management, the Reserve Bank of India (RBI) said. For the regular customer, the core protection for their savings remains unchanged. The deposit insurance cover of Rs.5 lakh per depositor, per bank, which includes both principal and interest, is not affected by this new premium policy. The insurance is provided by the Deposit Insurance and Credit Guarantee Corp. (DICGC), a central bank subsidiary. The current flat rate of 12 paise per Rs.100 will serve as a ceiling, meaning well-managed banks will see their costs decrease, while no bank will pay a higher rate than the current one. Detailed guidelines are expected shortly, and the new premium structure will become effective from the next financial year. The goal is to "incentivize sound risk management by banks and reduce premium to be paid by better rated banks," RBI governor Sanjay Malhotra said. The existing system "does not differentiate between banks based on their soundness," RBI said, meaning a financially robust bank pays the same insurance rate as a riskier one. Under the new risk-based premium framework, this will change. The premium a bank pays will be directly linked to its risk profile. The insurance limit was raised from Rs.1 lakh in 2020 to boost depositor confidence....