Deposit Insurance & Credit Guarantee Corporation, (DICGC)

Deposit Insurance and Credit Guarantee
Corporation, (DICGC)

located at Mumbai is a subsidiary of Reserve Bank of India. DICGC provides
insurance on deposit to bank with various terms and conditions. Commercial banks
and cooperative banks are insured by the DICGC. Primary cooperative societies
are not insured by DICGC. The functions of the DICGC are governed under the
provisions of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (DICGC
act) and The Deposit Insurance and Credit Guarantee Corporation General Regulations,
1961. These regulations have been framed by the Reserve Bank of India in
exercise of the powers conferred by subsection (3) of section 50 of the said
act. The Preamble of the DICGC Act, 1961 states that it is an act to provide
for the establishment of a corporation for the purpose of insurance of deposits
and guarantee of credit facilities and for other matters connected therewith or
incidental thereto.
At present, deposit insurance cover is
compulsory for the commercial banks, the RRBs and the co-operative banks.


The authorized capital of the corporation is
Rs. 50 crore, which is fully issued by the Reserve Bank of India (RBI). The
corporation is headed by Chairman who is Deputy Governor of Reserve Bank of
Insurance Cover: Banks can get insurance cover on all deposit like saving, fixed, current and
recurring, etc. Since 1993 insurance is provided up to an amount of rupees 1.00
for both principal
and interest amount.
Premium: Deposit insurance premium is borne entirely by the insured
At present, the deposit insurance premium is charged (on
advance basis) on a half-yearly basis based on deposit balances as on end-June
and end-December basis. The premium for half years ending June and December is
required to be remitted by July-/January-end respectively. Banks would
be given a period of one month’s time to pay the advance premium amount, as is
the present practice.
The premium payable by banks to the
corporation is 10 paisa for rupees 100. The premium is payable by the bank in
two installments that is 5 paisa for rupees 100 each by not later than last
working day of May and November each year. In case the last working day being a
holiday, the preceding day is considered last working day. The premium is paid
in advance that is if the bank is paying premium by May 2017, it covers deposit
from 1st April 2017 to 30th September 2017.
The Corporation has the power to cancel the registration of
an insured bank if it fails to pay the premium for three consecutive half-year
Return: The banks are
required to submit DI return within one month of the half year. If the insured
bank fails to furnish DI-Returns within the above prescribed time limit, it
shall be punishable with fine up to Rs. 2,000 for each such offence and additional
fine up to Rupees 100 per day during which the failure continues after
conviction for the first search failure.
Settlement of Claim: In case a bank is liquidated or wound up, every depositor of the bank
registered with the DICGC will get payment equal to his deposit held by him in
the same right and same capacity in all the branches of that bank put together.
However this will be subject to maximum limit of rupees one lakh only.  This
amount will be calculated as outstanding on the date of cancellation of
registration that is date of cancellation of license or order for winding up of
the bank or liquidation.

Now say a bank fails and a scheme of
amalgamation, merger takes place where the depositor’s complete deposits are
not fully protected. In such case the DICGC will pay the difference between the
full amount of deposit or the limit of insurance cover in force at that time,
whichever is less, and the amount actually received by him under the scheme.

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