Bank Deposit Insurance

Deposit Insurance and Credit Guarantee Corporation (DICGC)

DICGC is a subsidiary of Reserve Bank of India which provides insurance of deposits and guaranteeing of credit facilities to all such banks registered under the guidelines of the RBI Act.

• The DICGC insures all deposits such as Savings, Fixed, Current, Recurring, etc.
• All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are insured by the DICGC.
• All State, Central and Primary cooperative banks, also called urban cooperative banks, functioning in States / Union Territories which have amended the local Cooperative Societies Act empowering the Reserve Bank of India (RBI) to order the Registrar of Cooperative Societies of the State / Union Territory to wind up a cooperative bank or to supersede its committee of management and requiring the Registrar not to take any action regarding winding up, amalgamation or reconstruction of a co-operative bank without prior sanction in writing from the Reserve Bank are covered under the Deposit Insurance System.
• At present all co-operative banks other than those from the States of Meghalaya, and the Union Territories of Chandigarh, Lakshadweep and Dadra and Nagar Haveli are covered under the deposit insurance system of DICGC.
• Primary cooperative societies are not insured by the DICGC.
• Each deposit is insured up to a maximum of Rs.5,00,000/- (Rupees Five Lakhs Only) for both principal and interest amount held by the investor. The deposits kept in different branches of same bank are aggregated for the purpose of insurance cover and a maximum amount of up to Rupees Five Lakhs is covered.

For example, if an individual has an account with a principal amount of Rs.4,90,000/- plus accrued interest of Rs.9,000/- the total amount insured by the DICGC would be Rs.4,99,000/-. If, however, the principal amount in that account was Rs.5,00,000/-, the accrued interest would not be insured, not because it was interest but because that was the amount over the insurance limit.

• If an individual also opens other deposit accounts in his capacity as a partner of a firm or guardian of a minor or director of a company or trustee of a trust or a joint account, say with his/her spouse, in one or more branches of the bank then such accounts are considered as held in different capacity and different right. Accordingly, such deposits accounts will also enjoy the insurance cover up to Rupees Five Lakhs separately.
• All funds held in the same type of ownership at the same bank are added together before deposit insurance is determined. If the funds are in different types of ownership or are deposited into separate banks, they would then be separately insured.
• If individuals open more than one joint accounts in which their names are not in the same order for example, A, B and C; C, B and A; C, A and B; A, C and B; or group of persons are different say A, B and C and A, B and D etc. then, the deposits held in these joint accounts are considered as held in the different capacity and different right. Accordingly, insurance cover will be available separately up to Rupees Five Lakhs to every such joint account where the names appearing in different order or names are different.
• If a bank goes into liquidation, DICGC is liable to pay to the liquidator the claim amount of each depositor up to Rupees Five Lakhs within two months from the date of receipt of claim list from the liquidator. The liquidator has to disburse the claim amount to each insured depositor corresponding to their claim amount.
• If a bank is reconstructed or amalgamated / merged with another bank: The DICGC pays the bank concerned, the difference between the full amount of deposit or the limit of insurance cover in force at the time, whichever is less and the amount received by him under the reconstruction / amalgamation scheme within two months from the date of receipt of claim list from the transferee bank / Chief Executive Officer of the insured bank/transferee bank as the case may be.
• The DICGC while registering the banks as insured banks furnishes them with printed leaflets for display giving information relating to the protection afforded by the Corporation to the depositors of the insured banks. In case of doubt, depositor should make specific enquiry from the branch official in this regard.
• Banks have the right to set off their dues from the amount of deposits. The deposit insurance is available after netting of such dues.
• Deposit insurance premium is borne entirely by the insured bank.
• The deposit insurance scheme is compulsory and no bank can withdraw from it. The Corporation may cancel the registration of an insured bank if it fails to pay the premium for three consecutive half year periods. In the event of the DICGC withdrawing its coverage from any bank for default in the payment of premium the public will be notified through newspapers.
• Registration of an insured bank stands cancelled if the bank is prohibited from receiving fresh deposits; or its license is cancelled or a license is refused to it by the RESERVE BANK; or it is wound up either voluntarily or compulsorily; or it ceases to be a banking company or a co-operative bank within the meaning of Section 36A(2) of the Banking Regulation Act, 1949; or it has transferred all its deposit liabilities to any other institution; or it is amalgamated with any other bank or a scheme of compromise or arrangement or of reconstruction has been sanctioned by a competent authority and the said scheme does not permit acceptance of fresh deposits. In the event of the cancellation of registration of a bank, deposits of the bank remain covered by the insurance till the date of the cancellation.
• On liquidation etc. of other de-registered banks i.e., banks which have been de-registered on other grounds such as non-payment of premium or their ceasing to be eligible co-operative banks under section 2(gg) of the DICGC Act, 1961, the Corporation will have no liability.