Deposit Insurance and Credit Guarantee Corporation

The Deposit Insurance and Credit Guarantee Corporation (DICGC) was launched on 15th July 1978. As a key subsidiary of the Reserve Bank of India, this corporation was formed by merging two entities: the Deposit Insurance Corporation (DIC) and the Credit Guarantee Corporation of India Limited (CGCI). The DICGC's primary mission is to provide insurance for deposits and guarantee credit facilities to bank customers, ensuring trust in the banking system amongst customers and depositors across India.

Objective of DICGC

The DICGC primarily benefits small depositors by bolstering public confidence in the banking system through deposit insurance. In the event of a bank failure, the DICGC steps in to compensate small depositors, ensuring they receive the amount deposited in any bank. This endeavor ensures stability and trust in financial transactions and the overall banking landscape in India.

All commercial banks, including foreign, local, cooperative banks, and regional banks are covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC).

Features of DICGC Guarantee

Each depositor is granted a guarantee of up to Rs.1 lakh for both the principal and interest amounts.
In cases where a customer holds accounts in various banks, each account enjoys coverage of Rs. 1 lakh.
If a customer holds multiple accounts within a single bank, these accounts are aggregated as one for insurance purposes.
Deposit insurance is provided to depositors at no cost.
The insurance premium is paid by the insured banks directly to the DICGC.
The DICGC holds the power to revoke the registration of a bank that fails to pay the premium for three consecutive half-year periods.
Registration can be reinstated upon a bank's request, provided all overdue premiums are settled.

Types of Deposits Covered

All bank deposits, including savings deposits, current deposits, and recurring deposits, are insured by the DICGC. However, certain deposits do not fall under this umbrella:

Deposits from foreign governments
Deposits from Central/State Governments
Inter-bank deposits
Deposits from State Land Development Banks with the State cooperative banks
Amounts due/deposits received outside India
Amounts exempted by the corporation with prior RBI approval

Maintenance of Premium

Insured banks are required to pay the premium by the last day of May and November each year. Delays incur an 8% interest on overdue amounts, calculated on a daily basis assuming a 365-day year. The premium can be paid in these ways:

Direct credit to the Deposit Insurance Fund account held by RBI, Mumbai.
Payment via crossed cheque, demand draft, or T.T, dispatched for settlement in Mumbai.

Maintenance of Funds

The Corporation manages several funds which are crucial for its operations:

Deposit Insurance Fund
Credit Guarantee Fund
General Fund

The first two funds are supported by insurance premiums and guarantee fees, facilitating claims compensation. The General Fund covers establishment and administrative expenditures. Surplus funds from these accounts are invested in Central Government securities, with the income directed back to the respective funds.

For initiatives supporting startups, such as the Notified Credit Guarantee Scheme for Startups and the Credit Guarantee Scheme for Startups (CGSS), these funds play a vital role in extending the outreach of financial support.

Additionally, there are specific schemes addressing stressed non-performing assets (NPA) for MSMEs and initiatives like the Extension of Credit Guarantee Scheme for Subordinate Debt providing pivotal financial solutions.

The Deposit Insurance and Credit Guarantee Corporation also plays a significant role in support schemes like the NIRVIK Export Credit Insurance Scheme, enhancing export credit and boosting confidence among exporters.

Back to Learn

Frequently Asked Questions

Common questions about Deposit Insurance and Credit Guarantee Corporation India.

The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a subsidiary of the Reserve Bank of India, established in 1978 by combining the Deposit Insurance Corporation (DIC) and the Credit Guarantee Corporation of India Limited (CGCI). Its primary objective is to provide insurance for deposits and guarantee credit facilities to bank customers, thereby promoting public confidence in the banking system.

DICGC guarantees deposits up to Rs. 1 lakh (including principal and interest) for each depositor in a bank. If a customer has multiple accounts in the same bank, all accounts are considered as one account and insured for a maximum of Rs. 1 lakh.

All commercial banks, including foreign banks, local banks, cooperative banks, and regional banks, are covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC).

DICGC covers various types of bank deposits, such as savings deposits, current deposits, and recurring deposits. However, it does not cover deposits made by foreign governments, central/state governments, inter-bank deposits, and deposits made outside India.

Insured banks are required to pay the deposit insurance premium to DICGC by the last day of May and November every year. The premium can be paid directly to the Deposit Insurance Fund account maintained by RBI or by crossed cheque, demand draft, or T.T. drawn in Mumbai.

DICGC maintains three funds: the Deposit Insurance Fund, the Credit Guarantee Fund, and the General Fund. The Deposit Insurance Fund and Credit Guarantee Fund are funded by insurance premiums and guarantee fees, and are used to compensate respective claims. The General Fund is used for administrative and establishment expenses of the Corporation.

The balance amount from the three funds maintained by DICGC is invested in Central Government securities. The income received from such investments is credited to the respective funds.

Yes, DICGC has the authority to cancel the registration of an insured bank if the bank fails to pay the premium for three consecutive half-year periods. However, DICGC can also restore the registration if the bank requests restoration and pays all overdue premiums.

Yes, depositors or customers can avail the benefits of deposit insurance from DICGC free of cost. The deposit insurance premium is paid by the insured banks to DICGC.

If an insured bank fails to pay the premium within the allocated time period, it must pay an interest of 8% along with the overdue premium. The interest is calculated based on the number of default days, considering one year as 365 days.