Deposit insurance India
A Guide to the deposit insurance and credit guarantee corporation (DICGC)
Outline of the System and Q & A
Q1 Which banks are insured by the DICGC?
Commercial Banks: All commercial banks including branches of foreign
banks functioning in India, local area banks and regional rural banks
are insured by the DICGC.
Cooperative Banks: All State, Central and Primary cooperative banks,
also called urban cooperative banks, functioning in States / Union
Territories which have amended the local Cooperative Societies Act
empowering the Reserve Bank of India (RBI) to order the Registrar of
Cooperative Societies of the State / Union Territory to wind up a
cooperative bank or to supersede its committee of management and
requiring the Registrar not to take any action regarding winding up,
amalgamation or reconstruction of a co-operative bank without prior
sanction in writing from the Reserve Bank are covered under the Deposit
Insurance System. At present all co-operative banks other than those
from the States of Meghalaya, and the Union Territories of Chandigarh,
Lakshadweep and Dadra and Nagar Haveli are covered under the deposit
insurance system of DICGC.
Primary cooperative societies are not insured by the DICGC.
Q 2 What does the DICGC
In the event of a bank failure, DICGC protects bank deposits
that are payable in India.
The DICGC insures all deposits such as savings, fixed,
current, recurring, etc. except the following types of
(i) Deposits of foreign Governments;
(ii) Deposits of Central/State Governments;
(iv) Deposits of the State Land Development Banks with the
State co-operative bank;
(v) Any amount due on account of any deposit received
(vi) Any amount, which has been specifically exempted by the
corporation with the previous approval of Reserve Bank of
Q 3 What is the maximum deposit amount insured by the DICGC?
Each depositor in a bank is insured upto a maximum of
Rs.1,00,000 (Rupees One Lakh) for both principal and
interest amount held by him in the same capacity and same
right as on the date of liquidation/cancellation of bank's
licence or the date on which the scheme of
amalgamation/merger/reconstruction comes into force.
Q 4 How will I know whether my bank is insured by the DICGC
The DICGC while registering the banks as insured banks
furnishes them with printed leaflets for display giving
information relating to the protection afforded by the
Corporation to the depositors of the insured banks. In case
of doubt, depositor should make specific enquiry from the
branch official in this regard.
Q 5 What is the ceiling on amount of Insured deposits kept
by one person in different branches of a bank?
The deposits kept in different branches of a bank are
aggregated for the purpose of insurance cover and a maximum
amount upto Rupees one lakh is paid.
Q 6 Does the DICGC insure just the principal on an account
or both principal and accrued interest?
The DICGC insures principal and interest upto a maximum
amount of Rs. One lakh. For example, if an inpidual had an
account with a principal amount of Rs.95,000 plus accrued
interest of Rs.4,000, the total amount insured by the DICGC
would be Rs.99,000. If, however, the principal amount in
that account was Rs. One lakh, the accrued interest would
not be insured, not because it was interest but because that
was the amount over the insurance limit.
Q 7 Can deposit insurance be increased by depositing funds
into several different accounts all at the same bank?
All funds held in the same type of ownership at the same
bank are added together before deposit insurance is
determined. If the funds are in different types of ownership
or are deposited into separate banks they would then be
Q 8 What is a single ownership account?
A single (or inpidual) ownership account is an account owned
by one person. Such accounts include those in the owner’s
name; those established for the benefit of the owner by
agents, nominees, guardians, custodians, or conservators;
and those established by a business that is a sole
Q 9 Are deposits in different banks separately insured?
Yes. If you have deposits with more than one bank, deposit
insurance coverage limit is applied separately to the
deposits in each bank.
Q 10 If I have my funds on deposit at two different banks,
and those two banks are closed on the same day, are my funds
added together, or insured separately?
Your funds from each bank would be insured separately,
regardless of the date of closure.
Q 11 What is the meaning of deposits held in the same
capacity and same right; and deposits held in different
capacity and different right?
If an inpidual opens more than one deposit account in one or
more branches of a bank, e.g. Shri S. K. Pandit opens one or
more savings/current account and one or more fixed/recurring
deposit accounts etc., all these are considered as accounts
held in the same capacity and in the same right. Therefore,
the balances in all these accounts are aggregated and
maximum insurance cover is available upto rupees one lakh.
If Shri S. K. Pandit holds other deposit accounts in his
capacity as a partner of a firm or guardian of a minor or
director of a company or trustee of a Trust or a joint
account, say with his wife Smt. S. K. Pandit, in one or more
branches of the bank then such accounts are considered as
held in different capacity and different right. Accordingly,
such deposits accounts will also enjoy the insurance cover
upto rupees one lakh separately.
It is further clarified that the deposit held in the name of
the proprietary concern where a depositor is the sole
proprietor and the deposit held in his inpidual capacity are
aggregated and insurance cover is available upto rupees one
lakh in maximum.
Q 12 Can the bank deduct
the amount of dues payable by the depositor?
Yes. Banks have the right to set off their dues from the amount of
deposits. The deposit insurance is available after netting of such dues.
Q 13 Who pays the cost of deposit insurance?
Deposit insurance premium is borne entirely by the insured bank.
Q 14 When is the DICGC liable to pay?
If a bank goes into liquidation: The DICGC is liable to pay to each
depositor through the liquidator, the amount of his deposit upto Rupees
one lakh within two months from the date of receipt of claim list from
If a bank is reconstructed or amalgamated / merged with another bank:
Where in respect of an insured bank a scheme of compromise or
arrangement or of reconstruction or amalgamation has been sanctioned by
any competent authority and the said scheme provides for each depositor
being paid or credited with, on the date on which the scheme comes into
force, an amount which is less than the original amount and also the
specified amount, the Corporation shall be liable to pay to every such
depositor in accordance with the provisions of section 18 of DICGC Act
an amount equivalent to the difference between the amount so paid or
credited and the original amount, or the difference between the amount
so paid or credited and the specified amount, whichever is less:
Provided that where any such scheme also provides that any payment made
to a depositor before the coming into force of the scheme shall be
reckoned towards the payment due to him under that scheme, then the
scheme shall be deemed to have provided for that payment being made on
the date of its coming into force.
Q 15 Does the DICGC directly deal with the depositors of failed banks?
No. In the event of a bank's liquidation, the liquidator prepares
depositor wise claim list and sends it to the DICGC. After scrutiny the
DICGC pays the money to the liquidator who is liable to pay to the
depositors. In the case of amalgamation / merger of banks, the amount
due to each depositor is paid to the transferee bank.
Q 16 Can any insured bank withdraw from the DICGC coverage?
No. The deposit insurance scheme is compulsory and no bank can withdraw
Q 17 Can the DICGC withdraw deposit insurance coverage from any bank?
The Corporation may cancel the registration of an insured bank if it
fails to pay the premium for three consecutive half year periods. In the
event of the DICGC withdrawing its coverage from any bank for default in
the payment of premium the public will be notified through newspapers.
Registration of an insured bank stands cancelled if the bank is
prohibited from receiving fresh deposits; or its licence is cancelled or
a licence is refused to it by the RESERVE BANK; or it is wound up either
voluntarily or compulsorily; or it ceases to be a banking company or a
co-operative bank within the meaning of Section 36A(2) of the Banking
Regulation Act, 1949; or it has transferred all its deposit liabilities
to any other institution; or it is amalgamated with any other bank or a
scheme of compromise or arrangement or of reconstruction has been
sanctioned by a competent authority and the said scheme does not permit
acceptance of fresh deposits. In the event of the cancellation of
registration of a bank, deposits of the bank remain covered by the
insurance till the date of the cancellation.
Q 18 What will be the Corporation’s liability to the banks on de-registration.
The Corporation has deposit insurance liability on liquidation etc. of "Insured
banks" i.e. banks which have been de-registered (a) on account of
prohibition on receiving fresh deposits or (b) on cancellation of
license or it is found that license can not be granted. The liability of
the Corporation in these cases is limited to the extent of deposits as
on the date of cancellation of registration of bank as an insured bank.
On liquidation etc. of other de-registered banks i.e. banks which have
been de-registered on other grounds such as non payment of premium or
their ceasing to be eligible co-operative banks under section 2(gg) of
the DICGC Act, 1961, the Corporation will have no liability.