Image Source Jul 31, 2021 07:39 IST · 1 min read
Deposit Insurance and Credit Guarantee Corporation (DICGC) was established on 15 July 1978 under the Deposit Insurance and Credit Guarantee Corporation Act, 1961.
DICGC insures all bank deposits, such as saving, fixed, current, recurring deposit for up to the limit of Rs 5 lakh of each depositor in a bank. However, if there are more accounts in same bank, all of those are treated as a single account.
It is a wholly-owned subsidiary of the Reserve Bank of India (RBI), provides deposit insurance to bank depositors if a bank fails to pay them their deposits.
Last year, the amount of deposit insurance per individual was hiked to Rs 5 lakh (principal and interest) from Rs 1 lakh.
The functions of the subsidiary are governed by the provisions of The Deposit Insurance and Credit Guarantee Corporation Act, 1961 (DICGC Act) and The Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961.
The Deposit Insurance premium normally paid by banks to the DICGC is being raised from 10 paise for every Rs 100 deposit, to 12 paise and a limit of 15 paise has been imposed.
So far, the claim on deposit insurance could be made only after the bank's licence was cancelled and its liquidation proceedings were started.
Deposit Insurance Credit Guarantee Corporation Bill 2021
In present scenario, accessing depositors money normally takes about 8-10 years, after complete liquidation of the bank.The Deposit Insurance Credit Guarantee Corporation Bill 2021 propose to return upto Rs 5 lakh of their savings within 90 days of the central bank's imposition of a moratorium on a bank's operations.
As per the proposed process, once a bank is in trouble, it will have to collect all the account details and balances and share it with the Deposit Insurance Credit Guarantee Corporation (DICGC) within 45 days. The Corporation will get another 45 days to check these details and process the claims.
