Bank Deposit Insurance Programme


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    • Amendment to DICGC: The Centre had passed an amendment to the Deposit Insurance and Credit Guarantee Corporation Act to ensure that account holders can access their insured deposit amount within 90 days of such a liability arising in the event of a bank coming under the moratorium imposed by the Reserve Bank of India (RBI).
    • Norms for deposit insurance earlier: Earlier, out of the amount deposited in the bank, only Rs 50,000 was guaranteed, which was then raised to Rs 1 lakh.
    • Current norms for deposit insurance: Now, if a bank is weak or is even about to go bankrupt, depositors will get their money of up to Rs five lakhs within 90 days.
      • Within the first 45 days of the bank being put under a moratorium, the DICGC would collect all information relating to deposit accounts. In the next 45 days, it will review the information and repay depositors closer to the 90th day.
    • Deposits covered: Deposit insurance covers all deposits such as savings, fixed, current, recurring deposits, in all commercial banks, functioning in India.
    • Coverage: Along with Commercial Banks, deposits in the state, central and primary cooperative banks, functioning in states/union territories are also covered.


    • Long waiting period: Earlier account holders could not access their own money for upto 8-10 years after financial stress at banks.
    • Lack of immediate access to their funds: Troubles for depositors in getting immediate access to their funds in banks in recent cases such as Punjab & Maharashtra Co-operative (PMC) Bank, Yes Bank and Lakshmi Vilas Bank had put the spotlight on the subject of deposit insurance.
    • Liquidation or restructuring: Earlier, account holders had to wait for years till the liquidation or restructuring of a distressed lender to get their deposits that are insured against default.
    • No legal recourse to recover funds: Depositors having more than Rs 5 lakh in their account have no legal recourse to recover funds in case a bank collapses.


    • Confidence to depositors: These new changes would give confidence to depositors and strengthen the banking and financial system.
    • No need to wait for liquidation: Depositors can get insurance money without waiting for the eventual liquidation of the distressed banks.
    • Moratorium: This covers banks already under moratorium and those that could come under moratorium.
    • The depositor has a claim: In an unlikely event of a bank failure in India, a depositor has a claim to a maximum of Rs 5 lakh per account as insurance cover.
    • Highest safety on their funds parked: While the depositors enjoy the highest safety on their funds parked with banks, unlike the equity and bond investors in the banks, an element of risk always lurks on their deposits in case a bank collapses.

    Deposit Insurance and Credit Guarantee Corporation (DICGC)

    • It is a specialised division of the Reserve Bank of India which is under the jurisdiction of the Ministry of Finance.
    • It was established on 15 July 1978 under the Deposit Insurance and Credit Guarantee Corporation Act, 1961 for the purpose of providing insurance of deposits and guaranteeing of credit facilities.

    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.

    What does the DICGC insure?

    • The DICGC insures all deposits such as savings, fixed, current, recurring, etc. deposits except 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 and deposit received outside India
    • Any amount, which has been specifically exempted by the corporation with the previous approval of the Reserve Bank of India.

    Source: IE