Deposit Insurance and Credit Guarantee Corporation (DICGC)
Kartavya Desk Staff
Source: LM
Context: The Finance Ministry is considering increasing the deposit insurance limit, which currently stands at ₹5 lakh under the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961.
About Deposit Insurance and Credit Guarantee Corporation (DICGC):
• What it is? DICGC is a subsidiary of the Reserve Bank of India (RBI) that provides deposit insurance to bank depositors, ensuring the safety of their money in case of bank failures.
• DICGC is a subsidiary of the Reserve Bank of India (RBI) that provides deposit insurance to bank depositors, ensuring the safety of their money in case of bank failures.
• History:
• First considered in 1948 after banking crises in Bengal and revisited in 1960 after the collapse of Palai Central Bank & Laxmi Bank. The Deposit Insurance Corporation Act, 1961, came into force on January 1, 1962. Merged with the Credit Guarantee Corporation in 1978 to form DICGC under the Ministry of Finance.
• First considered in 1948 after banking crises in Bengal and revisited in 1960 after the collapse of Palai Central Bank & Laxmi Bank.
• The Deposit Insurance Corporation Act, 1961, came into force on January 1, 1962.
• Merged with the Credit Guarantee Corporation in 1978 to form DICGC under the Ministry of Finance.
• Ministry: Operates under the Department of Financial Services, Ministry of Finance.
• Aim: To protect depositors’ funds and maintain public confidence in the banking system.
• Functions: Insures deposits of banks against failure. Provides credit guarantees to priority sector lending institutions. Monitors bank financial health and steps in when required.
• Insures deposits of banks against failure.
• Provides credit guarantees to priority sector lending institutions.
• Monitors bank financial health and steps in when required.
• Features of Deposit Insurance:
• Existing Limit: Each depositor insured up to ₹5 lakh (including principal and interest) per bank, per depositor. Coverage: Includes commercial banks, regional rural banks, foreign banks operating in India, and cooperative banks. What is Covered? Savings accounts, fixed deposits, current accounts, and recurring deposits. What is NOT Covered? Deposits of foreign governments, central/state governments, and inter-bank deposits. Deposits with State Land Development Banks. Deposits outside India and exempted by RBI approval. Multiple Branches in Same Bank? Deposits across different branches of the same bank are clubbed under one insurance cover.
• Existing Limit: Each depositor insured up to ₹5 lakh (including principal and interest) per bank, per depositor.
• Coverage: Includes commercial banks, regional rural banks, foreign banks operating in India, and cooperative banks.
• What is Covered? Savings accounts, fixed deposits, current accounts, and recurring deposits.
• Savings accounts, fixed deposits, current accounts, and recurring deposits.
• What is NOT Covered? Deposits of foreign governments, central/state governments, and inter-bank deposits. Deposits with State Land Development Banks. Deposits outside India and exempted by RBI approval.
• Deposits of foreign governments, central/state governments, and inter-bank deposits.
• Deposits with State Land Development Banks.
• Deposits outside India and exempted by RBI approval.
• Multiple Branches in Same Bank? Deposits across different branches of the same bank are clubbed under one insurance cover.
• Deposits across different branches of the same bank are clubbed under one insurance cover.