Deposit Insurance And Credit Guarantee Corporation

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Deposit Insurance And Credit Guarantee Corporation

Deposit Insurance And Credit Guarantee Corporation

Established under the Deposit Insurance And Credit Guarantee Corporation Act 1961, is one of the wholly owned subsidiaries of the RBI.

  • DICGC insures all bank deposits, such as savings, fixed current, and recurring deposits for up to the limit of Rs 500,000 for each depositor in a bank. (If one has multiple accounts in a single bank, one will be given a maximum of Rs 500000 only in case of bank failure).
  • The bank (not the customer) pays the premium amount for insurance.
  • It is mandatory to take deposit insurance cover from

Deposit Insurance And Credit Guarantee Corporation by the following entities

  • All Scheduled Commercial Banks
  • Local Area Banks
  • Foreign banks with branches in India
  • Cooperative Banks.

No insurance cover is provided for the following

  • Deposits of Foreign Governments.
  • Deposits of Central/State Governments.
  • Inter-bank deposits.
  • Any amount due on account of any deposit received outside India.
  • Deposits of the State Land Development Banks with the State co-operative banks.
  • Any amount that the corporation has specifically excluded with the RBI’s prior approval.

FAQs Deposit Insurance And Credit Guarantee Corporation

What is the Deposit Insurance and Credit Guarantee Corporation (DICGC) and its role?

Established under the Deposit Insurance and Credit Guarantee Corporation Act of 1961, DICGC is a wholly owned subsidiary of the RBI. It provides insurance for bank deposits, including savings, fixed, current, and recurring deposits, up to a limit of Rs 500,000 per depositor in a bank in case of bank failure.

Who is eligible for deposit insurance cover, and what are the coverage limits?

All scheduled commercial banks, local area banks, foreign banks with branches in India, and cooperative banks are mandated to take deposit insurance cover from DICGC. The insurance covers deposits of individual depositors up to Rs 500,000 per bank, regardless of the number of accounts held by the depositor in that bank.

How is deposit insurance premium paid, and who bears the cost?

The premium for deposit insurance is paid by the bank, not the customer. It is a mandatory requirement for banks to pay the premium amount to DICGC for insuring their depositors’ funds.

What deposits are not covered by DICGC insurance?

DICGC does not provide insurance cover for deposits of foreign governments, central/state governments, inter-bank deposits, deposits received outside India, deposits of state land development banks with state cooperative banks, and any other deposits specifically excluded with RBI’s prior approval.

What is the significance of DICGC in ensuring depositor protection in the banking system?

DICGC plays a crucial role in safeguarding depositors’ interests by providing insurance cover for their deposits in case of bank failure. This instills confidence among depositors and contributes to the stability of the banking system.

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