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Deposit Insurance and Credit Guarantee Corporation (DICGC)

DICGC is one of the wholly owned subsidiary of the Reserve bank of India (RBI). It was established on 15 July 1978 under Deposit Insurance and Credit Guarantee Corporation Act, 1961 for the purpose of providing insurance of deposits and guaranteeing of credit facilities to the customers of banks.

This means that the money of customers who deposit money in the banks is insured by DICGC. And the customers who take loans from banks are guaranteed of money by DICGC.DICGC1

Before DICGC, there were two corporations named Deposit Insurance Corporation (DIC) and Credit Guarantee Corporation of India Ltd. (CGCI) which were merged to form DICGC with a view to integrate the functions of both DIC and CGCI.

Types of banks covered under DICGC:

  • The Deposit Insurance Scheme was initially extended to functioning commercial banks only. This included the State Bank of India and its subsidiaries, other commercial banks and the branches of the foreign banks operating in India.
  • Effective from April 1, 1981, the Corporation extended its guarantee support to credit granted to small scale industries also, after the cancellation of the Government of India’s credit guarantee scheme.
  • With effect from April 1, 1989, guarantee cover was extended to the entire priority sector advances, as per the definition of the Reserve Bank of India.
  • However, effective from April 1, 1995, all housing loans have been excluded from the purview of guarantee cover by the Corporation.

Types of Deposits Covered :

DICGC insures all bank deposits, such as saving, fixed, current, recurring, etc. except the following types of deposits.

  • Deposits of foreign Governments;
  • Deposits of Central/State Governments;
  • Inter-bank deposits;
  • Deposits of the State Land Development Banks with the State co-operative banks;
  • Any amount due on account of and deposit received outside India;
  • Any amount which has been specifically exempted by the corporation with the previous approval of the RBI.

Features of DICGC:

  • A maximum of Rs 1,00,000 is insured for each user for both principal and interest amount.
  • If the customer has accounts in different banks, they all account are insured to a maximum of Rs 1,00,000. However, if there are more accounts in same bank, they all are treated as a single account.
  • The insurance premium is paid by the insured banks itself. This means that the benefit of deposit insurance protection is made available to the depositors or customers of banks free of cost.
  • 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 periods.
  • The Corporation may restore the registration of the bank, which has been de-registered for non-payment of premium, if the concerned bank makes a request in this behalf and pays all the amounts due by way of premium from the date of default together with interest.
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