Deposit Insurance and Credit Guarantee Corporation (DICGC)

Subject: Government organization

Context:

Government had recently upped the deposits insured by Deposit Insurance and Credit Guarantee Corporation (DICGC) from ₹1 lakh (fixed in 1993 when the insurance scheme was started) to ₹5 lakh following the PMC Bank fiasco of 2019

Concept:

• Deposit insurance is a protection cover for deposit holders in a bank when the bank fails and does not have money to pay its depositors.
• This insurance is provided by Deposit Insurance and Credit Guarantee Corporation (DICGC) which is a wholly owned subsidiary of the RBI.
• DICGC insures all bank deposits, such as savings, fixed, current and recurring deposit for up to the limit of Rs 5 lakh per bank.
• DICGC covers depositors of all commercial banks and foreign banks operating in India, state, central and urban co-operative banks, local area banks and regional rural banks provided the bank has bought the cover from DICGC.
• The DICGC does not include 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 bank.
  • Any amount due on account of any deposit received outside India.
  • Any amount specifically exempted by the DICGC with previous approval of RBI.