Deposit Insurance and Credit Guarantee Corporation

Deposit Insurance and Credit Guarantee Corporation (DICGC) was launched on 15th July 1978. DICGC is one of the subsidiaries of the Reserve Bank of India. This corporation was derived by combining two corporations namely, Deposit Insurance Corporation (DIC) and Credit Guarantee Corporation of India Limited (CGCI). DICGC aims to provide insurance for deposits and to guarantee credit facilities to the customers of banks. The role of DICGC helps establish trust in the banking function amongst customers and depositors in India.

Objective of DICGC

DICGC operates to benefit the small depositors by securing the public confidence relating to the banking system by provision of deposit insurance. Hence, in case of failure of a bank, DICGC undertakes to compensate small depositors by repaying them the amount deposited in any bank.

All commercial banks including foreign, local, co-operative banks and regional banks are covered by theDeposit Insurance and Credit Guarantee Corporation (DICGC).

Features of DICGC Guarantee

• Every depositor is provided with Rs.1 lakh guarantee for both the principal and interest amount.
• If the customer has accounts in various banks, all the accounts will be insured for Rs. 1 lakh each.
• If the customer has access to more than one account in a bank, all the accounts will be considered as one account.
• The depositors or customers can avail the benefits of the deposit insurance for free of cost.
• On the other hand, the deposit insurance premium is paid by the insured banks to the DICGC.
• DICGC is endowed to cancel the registration of an insured bank if the bank does not pay the premium for three continuous half-year periods.
• DICGC can also restore the registration of a bank if the bank makes requests for restoration after payment of all overdue premiums.

Types of Deposits Covered

All bank deposits are insured by DICGC. They are saving deposits, current deposits, recurring deposits, etc.

The following deposits are not covered by this scheme.

• Deposits made by the foreign Governments
• Deposits made by the Central/State Governments
• Inter-bank deposits
• Deposits made by the State Land Development Banks with the State co-operative banks
• Any amount due and deposit received outside India
• The amount that is spared by the corporation with the previous approval of the RBI

Maintenance of Premium

It is mandatory for an insured bank to pay the premium within the last day of May and November every year. If the payment is not made within the allocated time period, an interest of 8% must be paid along with the overdue premium. The interest is calculated for the number of default days taking into account 1 year as 365 days. The premium amount can be paid in the following manner.

• It can be directly credited to the Deposit Insurance Fund account that is maintained under RBI, Deposit Accounts Department, Mumbai.
• It can be paid by crossed cheque, demand draft or T.T. drawn and should be paid in Mumbai.

Maintenance of Funds

The funds that are maintained by the Corporation are as follows.

• Deposit Insurance Fund
• Credit Guarantee Fund
• General Fund

The Deposit Insurance Fund and the Credit Guarantee Fund are funded by the insurance premia and by the guarantee fee. These funds are used to compensate the respective claims. The General Fund is used for the establishment and administrative expenses of the Corporation. The balance amount from these three funds is funded to the Central Government securities. The income received from such investments are credited to the respective funds.