Jane Dotson
The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a specialised division of the Reserve Bank of India, which was established in 1978 under the Deposit Insurance and Credit Guarantee Corporation Act, 1961. The DICGC insures all bank deposits, including savings, fixed, current, and recurring deposits, up to a limit of Rs. 500,000 per depositor. This limit was increased from 1 lakh to 5 lakh in February 2020, and applies to each user for both the principal and interest amounts. The DICGC has the power to cancel the registration of an insured bank if it fails to pay the premium for three consecutive half-year periods. Some of the banks insured by the DICGC include Punjab & Maharashtra Co-Op Bank (PBC Bank) and City Co-operative Bank.
| Characteristics | Values |
|---|---|
| Date of establishment | 15 July 1978 |
| Governing body | The Deposit Insurance and Credit Guarantee Corporation Act, 1961 (DICGC Act) and The Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961 |
| Jurisdiction | Ministry of Finance, Government of India |
| Purpose | Providing insurance of deposits and guaranteeing of credit facilities |
| Types of deposits insured | Saving, fixed, current, recurring deposit |
| Maximum insured amount per depositor | Rs. 500,000 |
| Number of insured cooperative banks | 21 |
| Examples of insured banks | Punjab & Maharashtra Co-Op Bank (PBC Bank), City Co-operative Bank |
Explore related products
What You'll Learn
The Deposit Insurance and Credit Guarantee Corporation Act, 1961
The purpose of the DICGC is to provide insurance of deposits and guarantee credit facilities. The DICGC insures all types of bank deposits, such as savings, fixed, current, and recurring deposits, up to a limit of 500,000 Indian rupees (as of February 2020) for each depositor in a bank. This limit was increased from 1 lakh to 5 lakh, and the maximum insured amount includes both the principal and interest amounts. If a customer has accounts in different branches of the same bank, these accounts are treated as a single account, and the total sum is insured up to the same limit.
The DICGC Act and The Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961, govern the functions of the DICGC. These regulations were framed by the Reserve Bank of India, which exercises the powers conferred by Sub-Section (3) of Section 50 of the Act.
The DICGC has the authority to cancel the registration of an insured bank if it fails to pay the premium for three consecutive half-year periods. However, the bank can request to restore its registration by paying all due amounts, including premiums and interest, from the date of default.
The DICGC plays a crucial role in protecting bank deposits and ensuring depositors' funds are safe up to the insured limit. It provides confidence and stability to the Indian banking system and its customers.
Colorado Healthcare: Public vs Private Insurance Preferences
You may want to see also
Explore related products
Maximum insured amount: Rs. 5,00,000
The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a specialised division of the Reserve Bank of India, established on 15 July 1978. It functions under the Deposit Insurance and Credit Guarantee Corporation Act, 1961, and its subsequent regulations. The DICGC insures all bank deposits, including savings, fixed, current, and recurring deposits, up to a maximum limit of Rs. 5,00,000 (five lakhs) per depositor in a bank. This limit was increased from Rs. 1 lakh to Rs. 5 lakhs on 4th February 2020, after the budget of 2020-21.
The Rs. 5,00,000 limit applies to both the principal and interest amounts held by the depositor. If a depositor has accounts in different branches of the same bank, all those accounts are considered together, and the total sum is insured up to a maximum of Rs. 5,00,000. However, if a depositor has accounts in multiple banks, the insurance coverage limit of Rs. 5,00,000 is applied separately to each bank.
The DICGC's insurance covers all commercial banks, including branches of foreign banks functioning in India, local area banks, regional rural banks, and cooperative banks (excluding primary cooperative societies). This insurance protects depositors from losing their money if a bank fails or faces financial difficulties. It is a vital component of the financial safety net, maintaining stability in the financial system and preventing panic during uncertain times.
While the current limit of Rs. 5,00,000 provides a level of assurance, there are discussions about increasing the deposit insurance limit beyond Rs. 5 lakhs. The Indian government is considering this move to further enhance financial security for depositors.
Champva Private Insurance: What You Need to Know
You may want to see also
Explore related products
Registration cancellation
The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a specialised division of the Reserve Bank of India, which falls under the jurisdiction of the Ministry of Finance, Government of India. It was established on 15 July 1978 under the Deposit Insurance and Credit Guarantee Corporation Act, 1961. The DICGC insures all types of bank deposits, including savings, fixed, current, and recurring deposits, for up to Rs. 500,000 per depositor. This limit was increased from 1 lakh to 5 lakh on 4 February 2020, and the insured amount covers both the principal and interest components up to a total sum of Rs. 5,00,000.
Regarding registration cancellation, the DICGC has the authority to cancel the registration of an insured bank if it fails to pay the premium for three consecutive half-year periods. However, the bank can request to have its registration restored by paying all outstanding premiums from the date of default, along with interest.
It is important to note that the Financial Sector Legislative Reforms Commission (FSLRC) was established by the Government of India, Ministry of Finance, on 24 March 2011. The FSLRC's mandate was to review and propose reforms for the Indian financial sector's legal and institutional framework. As per the FSLRC's recommendations, a regulatory framework consisting of seven agencies, including a deposit insurance-cum regulatory agency called the Resolution Corporation, was proposed. As a result, the current DICGC will be integrated into the Resolution Corporation, which will have a broader scope across the financial system.
In 2017, the Government of India introduced the Financial Resolution and Deposit Insurance bill (FRDI bill) in Lok Sabha. This bill proposed that banks pay a sum to the Resolution Corporation, but it did not specify the insured amount or the payout to depositors in the event of liquidation. This lack of clarity regarding depositor compensation has raised concerns.
To summarise, while the DICGC currently has the power to cancel the registration of banks that fail to meet their premium payment obligations, broader reforms are underway with the introduction of the FSLRC recommendations and the FRDI bill. These reforms aim to enhance the regulatory framework and provide deposit insurance across the financial system.
Bank of America: Are Your Deposits Insured?
You may want to see also
Explore related products
Resolution Corporation
The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a specialised division of the Reserve Bank of India, which falls under the jurisdiction of the Ministry of Finance, Government of India. It was established on 15 July 1978 under the Deposit Insurance and Credit Guarantee Corporation Act, 1961. The DICGC insures all types of bank deposits, including savings, fixed, current, and recurring deposits, up to a limit of ₹5,00,000 for each depositor in a bank.
The Financial Sector Legislative Reforms Commission (FSLRC) was set up by the Government of India, Ministry of Finance, on 24 March 2011. The FSLRC recommended a regulatory structure consisting of seven agencies, including a deposit insurance-cum regulatory agency, which was named the Resolution Corporation. The current DICGC will be subsumed into the Resolution Corporation, which will work across the financial system.
The Financial Resolution and Deposit Insurance Bill, 2017 (FRDI bill) was introduced in Lok Sabha in the Monsoon session of 2017. The bill proposes that banks pay a sum to the Resolution Corporation, but it does not specify the insured amount or the amount a depositor would receive in the event of liquidation. This has raised concerns about the level of protection provided to depositors under the new bill.
As per the Financial Resolution and Deposit Insurance Bill, 2017, a Resolution Corporation will be formed to oversee the resolution process for financial institutions in India. The Resolution Corporation will be responsible for authorising and regulating the resolution process, including the liquidation of banks, and will have the power to cancel the registration of banks that fail to meet their obligations.
The initiation of the insolvency resolution process is a critical function of the Resolution Corporation. When a financial institution experiences financial distress or defaults on its obligations, the Resolution Corporation can initiate the resolution process to protect the interests of depositors and ensure the stability of the financial system.
Flood Insurance: Private Options Absent Amidst Natural Disasters
You may want to see also
Cooperative banks insured by DICGC
The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a specialised division of the Reserve Bank of India, which falls under the jurisdiction of the Ministry of Finance, Government of India. The DICGC was established on 15 July 1978 under the Deposit Insurance and Credit Guarantee Corporation Act, 1961.
The DICGC insures all bank deposits, including savings, fixed, current, and recurring deposits, up to a limit of Rs. 500,000 per depositor. This limit was increased from 1 lakh to 5 lakh on 4 February 2020, and the maximum insured amount for each user, including principal and interest, is Rs. 5,00,000.
The DICGC covers all commercial banks, including foreign branches operating in India, as well as cooperative banks, whether primary, state, or central. Cooperative banks insured by the DICGC include:
- Chittorgarh Urban Co-Op. Bank Ltd., Chittorgarh, Rajasthan
- Chopda People's Cooperative Bank Ltd., Jalgaon, Maharashtra
- Churu Zila Urban Co-Operative Bank Ltd., Churu, Rajasthan
- Citizen Co-Op. Bank Ltd., Vasco Da Gama, Goa
- Citizen Credit Co-Operative Bank Ltd., Mumbai, Maharashtra
- Citizen S Co-Op. Bank Ltd. (New Delhi), Delhi
- Citizen Urban Coop. Bank Ltd., Jalandhar, Punjab
- Citizens Co-Operative Bank Ltd. (Jammu), Jammu, Jammu & Kashmir
- Coonoor Co-Operative Urban Bank Ltd., Nilgiris, Tamil Nadu
- Cooperative Rabobank U.A. Co-Operative Urban Bank Ltd., Dist. Ganjam, Parlakimedi, Odisha
- Cuddalore & Villipuram D. C Co-Op. Bank, Cuddalore, Tamil Nadu
- Cumbum Co-Op. Town Bank Ltd., Prakasam, Andhra Pradesh
- Cuttack Central Co-Op. Bank Ltd., Cuttack, Odisha
- Darjeeling Dist. Central Co-Op. Bank Ltd., Darjeeling, West Bengal
- Dattatray Maharaj Kalambe Jaoli Sah Bank Ltd., Mumbai, Maharashtra
- Daund Urban Coop. Bank Ltd., Daund, Maharashtra
- Dayalbagh Mahila Co-Op. Bank Ltd. [Agra], Agra, Uttar Pradesh
- Deccan Merchants Co-Operative Bank Ltd., Mumbai, Maharashtra
- Devika Urban Co-Op. Bank Ltd., Kashmir, Jammu & Kashmir
This is not an exhaustive list, and the DICGC website provides a more comprehensive list of insured banks.
Private Insurance vs ICBC: What's the Better Option?
You may want to see also
Frequently asked questions
The Deposit Insurance and Credit Guarantee Corporation (DICGC) insures all bank deposits, including saving, fixed, current, and recurring deposits. As of February 2020, the limit was increased to Rs. 500,000 per depositor. Some of the banks insured by the DICGC include Punjab & Maharashtra Co-Op Bank (PBC Bank) and City Co-operative Bank.
The DICGC is a specialised division of the Reserve Bank of India, established in 1978 under the Deposit Insurance and Credit Guarantee Corporation Act, 1961. Its purpose is to provide insurance of deposits and guarantee credit facilities.
The DICGC insures bank deposits up to a specified limit, which is currently Rs. 5,00,000. If a bank is liquidated, the DICGC will pay the depositors up to the insured amount. Banks are required to pay a premium to the DICGC for this insurance.
The DICGC has the power to cancel the registration of an insured bank if it fails to pay the premium for three consecutive half-year periods. However, the bank can request to have its registration restored by paying all due amounts, along with interest.
