Deposit Insurance and Credit Guarantee\nCorporation, (DICGC)\n\n\n\n DICGC,\nlocated at Mumbai is a subsidiary of Reserve Bank of India. DICGC provides\ninsurance on deposit to bank with various terms and conditions. Commercial banks\nand cooperative banks are insured by the DICGC. Primary cooperative societies\nare not insured by DICGC. The functions of the DICGC are governed under the\nprovisions of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (DICGC\nact) and The Deposit Insurance and Credit Guarantee Corporation General Regulations,\n1961. These regulations have been framed by the Reserve Bank of India in\nexercise of the powers conferred by subsection (3) of section 50 of the said\nact. The Preamble of the DICGC Act, 1961 states that it is an act to provide\nfor the establishment of a corporation for the purpose of insurance of deposits\nand guarantee of credit facilities and for other matters connected therewith or\nincidental thereto. At present, deposit insurance cover is\ncompulsory for the commercial banks, the RRBs and the co-operative banks.\n\nDICGC\n\n\n\n\n\nThe authorized capital of the corporation is\nRs. 50 crore, which is fully issued by the Reserve Bank of India (RBI). The\ncorporation is headed by Chairman who is Deputy Governor of Reserve Bank of\nIndia.\n\n\n\nInsurance Cover: Banks can get insurance cover on all deposit like saving, fixed, current and\nrecurring, etc. Since 1993 insurance is provided up to an amount of rupees 1.00\nlakh for both principal\nand interest amount.\n\n\n\nPremium: Deposit insurance premium is borne entirely by the insured\nbank. At present, the deposit insurance premium is charged (on\nadvance basis) on a half-yearly basis based on deposit balances as on end-June\nand end-December basis. The premium for half years ending June and December is\nrequired to be remitted by July-\/January-end respectively. Banks would\nbe given a period of one month's time to pay the advance premium amount, as is\nthe present practice.\n\nThe premium payable by banks to the\ncorporation is 10 paisa for rupees 100. The premium is payable by the bank in\ntwo installments that is 5 paisa for rupees 100 each by not later than last\nworking day of May and November each year. In case the last working day being a\nholiday, the preceding day is considered last working day. The premium is paid\nin advance that is if the bank is paying premium by May 2017, it covers deposit\nfrom 1st April 2017 to 30th September 2017. The Corporation has the power to cancel the registration of\nan insured bank if it fails to pay the premium for three consecutive half-year\nperiods\n\n\n\nReturn: The banks are\nrequired to submit DI return within one month of the half year. If the insured\nbank fails to furnish DI-Returns within the above prescribed time limit, it\nshall be punishable with fine up to Rs. 2,000 for each such offence and additional\nfine up to Rupees 100 per day during which the failure continues after\nconviction for the first search failure.\n\n\n\nSettlement of Claim: In case a bank is liquidated or wound up, every depositor of the bank\nregistered with the DICGC will get payment equal to his deposit held by him in\nthe same right and same capacity in all the branches of that bank put together.\nHowever this will be subject to maximum limit of rupees one lakh only. This\namount will be calculated as outstanding on the date of cancellation of\nregistration that is date of cancellation of license or order for winding up of\nthe bank or liquidation.\n\n\n \n\n\n\nNow say a bank fails and a scheme of\namalgamation, merger takes place where the depositor\u2019s complete deposits are\nnot fully protected. In such case the DICGC will pay the difference between the\nfull amount of deposit or the limit of insurance cover in force at that time,\nwhichever is less, and the amount actually received by him under the scheme.