Deposit Insurance in India

About Deposit Insurance

• About Deposit Insurance and Credit Guarantee Corporation (DICGC):
  • All deposits and interest income are insured by Deposit Insurance and Credit Guarantee Corporation (DICGC). It is the second oldest insurer in the world.
  • It is a statutory body created by the Deposit Insurance and Credit Guarantee Corporation Act, 1961. 
  • It is a wholly owned subsidiary of RBI.
• Insured banks by DICGC: All Scheduled Commercial Banks, Foreign Banks, Small Finance Banks, Payment Banks, Regional Rural Banks, Local Area Banks, State Co-operative Banks, District Central Co-operative Banks, Urban Co-operative Banks.
  • Primary Cooperative Societies are not covered by DICGC.
• Insurance Cover amount: Currently, the DICGC has raised the insurance cover to 5 lakhs. This covers all the money (Principal + Interest) with the bank e.g., savings, term deposit, recurring deposits etc.
  • Deposits kept in different branches of a bank are aggregated for the purpose of insurance cover and maximum amount of upto rupees 5 lakhs is paid.
  • All funds held in the same type of ownership at the same bank are added together before deposit insurance is determined. If funds are in different types of ownership or are deposited into separate banks they would then be separately insured.
• Insurance Premium: Insurance premium is provided by banks. This amount stands at Rs 12 paisa per Rs 100. 
• Following are not insured by DICGC: Following types of deposits are not covered under DICGC insurance:
  • Deposits of foreign governments.
  • Deposits of Central/State governments.
  • Inter-bank deposits.
  • Deposits of state lank development banks with state co-operative banks.
  • Any amount due on account of and deposit received outside India.
  • Any amount, which has been specifically exempted by the corporation with the previous approval of RBI.
• When does DICGC liable to pay? If a bank goes into liquidation, DICGC is liable to pay to the liquidator the claim amount of each depositor upto Rs 5 lakhs within two months from the date of receipt of claim list from the liquidator.