The DICGC is a subsidiary of the RBI (Reserve Bank of India). It helps provide deposit insurance when banks fail to pay their depositors the money they had deposited.
The maximum insurance guaranteed by the subsidiary is Rs 5 lakhs. That is, even if the amount with the bank exceeds Rs 5 lakhs, only Rs 5 lakhs will be provided to the depositor, including the principal deposit, as well as the interest.
DICGC full form
DICGC stands for Deposit Insurance and Credit Guarantee Corporation.
Working of the DICGC
The DICGC insures the money of the depositors kept in state, rural, national and foreign banks located in India. This option is only available for banks that have opted for DICGC cover. The RBI subsidiary operates as per The Deposit Insurance and Credit Guarantee Corporation Act, 1961 and The Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961, which were framed by the banking regulator under the provisions of Section 50, Sub-section (3) of the Act.
See also: All about Central Depository Services Ltd or CDSL
Things the DICGC does not cover
- Deposits of the central and state governments.
- Deposits from foreign governments.
- Inter-bank deposits.
- Deposits received outside India.
- State land development banks depositing with state cooperative banks.
- Other funds exempted by the prior permission of the RBI.
DICGC accreditation
Once a bank registers with the subsidiary, it is issued a certificate that states the registration and the information regarding the protection offered to the depositors of the bank. If the depositors have doubts, they can contact the bank officials for more details.
DICGC insurance: Timeline for interim payments
As per the rules, it is mandatory for the Corporation to pay the depositors the insured amount within 90 days after such liability occurs. The insured bank furnishes all the outstanding deposits’ information to the Corporation within the first 45 days. The Corporation verifies and authenticates the furnished data. After verification, the Corporation must pay the depositors. If the RBI gives an extension, the date on which the Corporation has to pay might be extended by 90 days.
See also: What is CIF number
DICGC insurance amount: Premium paid by banks
The insured banks are required to pay a premium to the Corporation on their deposits. The rate is fixed by RBI. The Act limits the rate of premium interest at 0.15% per annum on the total outstanding deposits.