What Is RBI's DICGC Scheme?

The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a wholly-owned subsidiary of the Reserve Bank of India (RBI). It provides insurance to bank customers if a bank goes bankrupt. Though deposit insurance has existed since January 1, 1962, the DICGC came into effect in 1978 with the merger of the Deposit Insurance Corporation (DIC) and the Credit Guarantee Corporation of India (CGCI). The objective of DICGC is to ensure financial stability, reduce systemic risks, and avoid panic among the public. DICGC insurance is used when a bank fails, merges, or liquidates. However, it has a limitation on the cover it provides. Let’s explore more.

What Does it Cover?

• DICGC covers customers’ deposits up to Rs 5 lakh per account per bank.

• Banks that come under DICGC include private and public scheduled commercial banks, small finance banks, payment banks, foreign banks, regional rural banks, local area banks, and cooperative banks.

• Non-banking financial companies (NBFCs), land development banks, mutual funds, stocks, bonds, exchange-traded funds, and cryptocurrencies are not covered under DICGC.

• As of March 31, 2024, DICGC had 1,997 banks registered. A total of 289.80 crore accounts were covered under deposit insurance, of which 97.80 per cent were fully protected and 2.20 per cent were partially protected.

How It Works

• The Rs 5 lakh cover is available on both the principal and interest for multiple accounts held in the same right and capacity. For example, if A has savings, current and fixed/recurring deposit accounts in a bank, all in his/her name, the overall coverage will be Rs 5 lakh, even if the total balance is higher.

• However, if A has one account in his/her name, a joint account with a spouse, a minor account with the child, a current account as a partner in a firm, and an account as a trustee of a trust, these account will be considered as held in different rights and capacities. Here, each of the accounts will have a Rs 5 lakh cover.

• Accounts held by the same person in different banks are also eligible for a cover of Rs lakh each.

How Are Claims Settled?

• DICGC insures all savings, current, fixed, and recurring deposit accounts. It pays the lower of the full deposit amount and the insurance limit.

• In case of liquidation, banks prepare a depositor-wise claim list and sends it to DICGC, which verifies the claims and pays the amount to the liquidator for each depositor.

• In case of merger or amalgamation, the amount is paid to the transferee bank.

• If the bank is placed under the all-inclusive directions by RBI, then DICGC pays to the bank as per RBI’s direction.

• Depositors can check the claim status online through the Daava Soochak—Claim Status Tracker tab on DICGC’s website.