DICGC (Deposit Insurance and Credit Guarantee Corporation) is a wholly-owned subsidiary of the Reserve Bank of India. It insures all the bank deposits such as Savings account, Current Account, Fixed Deposit, and Recurring Deposit) payable in India, up to the limit of rupees 5 lakh of each deposit in the bank. It was formed on July 15, 1978, under the Deposit Insurance and Credit Guarantee Act, 1961. It is headquartered in Mumbai, India. The executive/Chairperson of DICGC is B.P Kanungo who is a Deputy Chairman of the Resave Bank of India.
Mission of DICGC
To contribute to financial stability by securing public confidence in the banking system through provision of deposit insurance, particularly for the benefit of the small depositors.
Vision of DICGC
To be recognised as one of the most efficient and effective deposit insurance providers, responsive to the needs of its stakeholders.
History of DICGC:
The idea of the formation of Deposit Insurance came for the first time in 1948 after the Banking crisis in Bengal. It was again came up for reconsideration in 1949 but was put on hold by RBI, as it was making required arrangements for the inspection of all the banks of that time. In 1950, this concept was supported by the Rural Banking Enquiry Committee. However, after the crash of Palai Central Bank Ltd and The Laxmi Bank Ltd in 1969, serious thought on this idea was given by the Central Government and the Reserve bank of India. On August 21, 1961, a bill was introduced in the parliament called as Deposit Insurance Corporation Bill (DIC). After it got a nod from the parliament, it also got the approval of the President on December 07, 1961.
The Deposit Insurance Act, 1961 came into force on January 01, 1962. It initially functioned only for the commercial banks (SBI and its subsidiaries, other commercial banks and the branched of the foreign banks operating in India). In 1968, after the adoption of the Deposit Insurance (Amendment) Act, 1968, co-operative banks also got insured by Deposit Insurance Corporation (DIC) under the provisions of Section 13 of the Act.
On January 14, 1971, the Reserve Bank of India promoted a public limited company called as Credit Guarantee Corporation of India Ltd.(CGCI). It was aimed to encourage the commercial banks to fulfill the credit needs of the neglected sectors by providing guarantee cover to the loans and advances granted by credit institutions.
On July 15, 1978, these two organizations (DIC and CGCI) were merged and was named as Deposit Insurance and Credit Guarantee Corporation (DICGC). Also, the act named as Deposit Insurance Act was also renamed as Deposit Insurance and Credit Guarantee Corporation Act, 1961
Who all are insured by DICGC?
DICGC covers all commercial and cooperative banks in India with exceptions of some Union Territories like Chandigarh, Lakshadweep, Chandigarh and Dadar and Nagar Haveli. All the accounts (Savings, Current, Fixed and Recurring) payable in India are covered under DICGC. It is very important to know what types of deposits are not covered in DICGC and those are:
- Interbank deposits
- Deposits of Central/state government
- Amount due on account of any deposit received outside India.
- Foreign government deposits.
- Amount specifically exempted by DICGC.
- State land development banks deposits with the state cooperative bank
How to know if your bank is insured under DICGC?
DICGC is a mandatory scheme for all banks. No bank can voluntarily withdraw from being a part of DICGC. However, DICGC may cancel a bank membership, if that bank fails to pay the premium for three consecutive periods. Depositors will be notified through newspapers if any bank is no more from the DICGC coverage.
How much money will a depositor get as insurance?
A total amount of rupees 5 lakh is capped under DICGC, including Principal and interest amounts. If a depositor has an account in three different branches, a total amount of rupees 5 lakh will be paid to him/her as an aggregate amount. In the case of different types of ownership (Multi-account), DICGC will insure them separately.
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DICGC is compulsory for all Banks?