Insurance cover on bank deposits has been increased to Rs 5 lakh from Rs 1 lakh effective Tuesday, the Reserve Bank of India said in a statement.

This, the RBI said, has been done with a view to providing a greater measure of protection to depositors.On Saturday, Finance Minister Nirmala Sitharaman had made the announcement regarding increasing insurance cover to Rs 5 lakh in her Budget Speech.

Earlier in the day, Finance Secretary Rajiv Kumar said the Department of Financial Services has given approval for raising deposit insurance cover from Rs 1 lakh to Rs 5 lakh.

The move will help boost confidence of people in the banking system which has been shaken after a scam last year in Punjab and Maharashtra Cooperative Bank which affected lakhs of customers.

The deposit insurance scheme covers all banks operating in India, including private sector, cooperative and even branches of foreign banks. There are some exemptions such as deposits of foreign governments, deposits of central and state governments, and inter-bank deposits.