{"id":10634,"date":"2021-12-13T00:00:00","date_gmt":"2021-12-13T00:00:00","guid":{"rendered":"https:\/\/www.nextias.com\/current_affairs\/uncategorized\/13-12-2021\/bank-deposit-insurance-programme\/"},"modified":"2025-02-27T16:22:02","modified_gmt":"2025-02-27T10:52:02","slug":"bank-deposit-insurance-programme","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/13-12-2021\/bank-deposit-insurance-programme","title":{"rendered":"Bank Deposit Insurance Programme"},"content":{"rendered":"\n<p><span style=\"font-size: 13pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong><u>In News<\/u><\/strong><\/span><\/span><\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">The PM noted that the deposits worth Rs 76 lakh crore were insured under the <\/span><\/span><\/span><a style=\"text-decoration: none;\" href=\"https:\/\/www.nextias.com\/current-affairs\/29-07-2021\/deposit-insurance-and-credit-guarantee-corporation-dicgc-bill-2021\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #1155cc;\"><strong><u>Deposit Insurance and Credit Guarantee Corporation (DICGC) Act <\/u><\/strong><\/span><\/span><\/span><\/a><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">providing full coverage to around 98 per cent of bank accounts.<\/span><\/span><\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-size: 13pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong><u>About<\/u><\/strong><\/span><\/span><\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Amendment to DICGC<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">: 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).<\/span><\/span><\/span><\/li>\n\n\n\n<li><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Norms for deposit insurance earlier<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">: Earlier, out of the amount deposited in the bank, only Rs 50,000 was guaranteed, which was then raised to Rs 1 lakh.<\/span><\/span><\/span><\/li>\n\n\n\n<li><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Current norms for deposit insurance<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">: Now, if a bank is weak or is even about to go bankrupt, depositors will get their money of up to <\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Rs five lakhs within 90 days.<\/strong><\/span><\/span><\/span>\n<ul class=\"wp-block-list\">\n<li><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Within the first 45 days<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"> 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.<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Deposits covered<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">: Deposit insurance <\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>covers all deposits<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"> such as savings, fixed, current, recurring deposits, in all commercial banks, functioning in India.<\/span><\/span><\/span><\/li>\n\n\n\n<li><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Coverage: <\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">Along with<\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong> Commercial Banks<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">, deposits in the state, central and primary <\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>cooperative banks<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">, functioning in states\/union territories are also covered.<\/span><\/span><\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-size: 13pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong><u>Issues<\/u><\/strong><\/span><\/span><\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Long waiting period<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">: Earlier account holders could not access their own money for upto 8-10 years after financial stress at banks.<\/span><\/span><\/span><\/li>\n\n\n\n<li><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Lack of immediate access to their funds<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">: Troubles for depositors in getting immediate access to their funds in banks in recent cases such as Punjab &amp; Maharashtra Co-operative (PMC) Bank, Yes Bank and Lakshmi Vilas Bank had put the spotlight on the subject of deposit insurance.<\/span><\/span><\/span><\/li>\n\n\n\n<li><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Liquidation or restructuring<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">: 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.<\/span><\/span><\/span><\/li>\n\n\n\n<li><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>No legal recourse to recover funds<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">: Depositors having more than Rs 5 lakh in their account have no legal recourse to recover funds in case a bank collapses.<\/span><\/span><\/span><\/li>\n<\/ul>\n\n\n\n<p><span style=\"font-size: 13pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong><u>Significance<\/u><\/strong><\/span><span style=\"color: #000000;\"><\/span><\/span><\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Confidence to depositors<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">: These new changes would give confidence to depositors and strengthen the banking and financial system.<\/span><\/span><\/span><\/li>\n\n\n\n<li><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>No need to wait for liquidation<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">: Depositors can get insurance money without waiting for the eventual liquidation of the distressed banks.<\/span><\/span><\/span><\/li>\n\n\n\n<li><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Moratorium<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">: This covers banks already under moratorium and those that could come under moratorium.<\/span><\/span><\/span><\/li>\n\n\n\n<li><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>The depositor has a claim<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">: 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.<\/span><\/span><\/span><\/li>\n\n\n\n<li><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Highest safety on their funds parked<\/strong><\/span><\/span><\/span><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">: 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.<\/span><\/span><\/span><\/li>\n<\/ul>\n\n\n\n<div>\n<table style=\"border-collapse: collapse; border: none; width: 590px;\" cellspacing=\"0\">\n<tbody>\n<tr>\n<td style=\"background-color: #ead1dc; vertical-align: top; width: 590px; border: 1px solid #000000;\">\n<p><span style=\"font-size: 13pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong><u>Deposit Insurance and Credit Guarantee Corporation (DICGC)<\/u><\/strong><\/span><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">It is a specialised division of the Reserve Bank of India which is under the jurisdiction of the Ministry of Finance.<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">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.<\/span><\/span><\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 13pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong><u>Which banks are insured by the DICGC?<\/u><\/strong><\/span><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">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.<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">Cooperative Banks: All State, Central and Primary cooperative banks, also called urban cooperative banks, functioning in States \/ Union Territories.<\/span><\/span><\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 13pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong><u>What does the DICGC insure?<\/u><\/strong><\/span><\/span><\/span><\/p>\n<ul>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">The DICGC insures all deposits such as savings, fixed, current, recurring, etc. deposits except the following types of deposits<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">Deposits of foreign Governments;<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">Deposits of Central\/State Governments;<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">Inter-bank deposits;<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">Deposits of the State Land Development Banks with the State co-operative bank;<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">Any amount due on account of and deposit received outside India<\/span><\/span><\/span><\/li>\n<li style=\"list-style-type: disc;\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\">Any amount, which has been specifically exempted by the corporation with the previous approval of the Reserve Bank of India.<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n\n\n\n<p class=\"has-background\" style=\"background-color:#ebecf0\"><strong>Read more:<\/strong> <a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/19-02-2025\/rbi-to-raise-deposit-insurance-cover\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/ca\/current-affairs\/19-02-2025\/rbi-to-raise-deposit-insurance-cover\"><strong>RBI to Raise Deposit Insurance Cover<\/strong><\/a><\/p>\n\n\n\n<p><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #000000;\"><strong>Source: <\/strong><\/span><\/span><\/span><a style=\"text-decoration: none;\" href=\"https:\/\/indianexpress.com\/article\/explained\/explained-bank-deposit-insurance-programme-and-norms-to-access-funds-7669001\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-size: 12pt;\"><span style=\"font-family: 'Book Antiqua',serif;\"><span style=\"color: #1155cc;\"><strong><u>IE<\/u><\/strong><\/span><\/span><\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In News About Issues Significance 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 [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":10635,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[26,46],"class_list":["post-10634","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs","tag-gs-3","tag-indian-economy-related-issues"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2023\/07\/1286138Screenshot.png","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/10634","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=10634"}],"version-history":[{"count":1,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/10634\/revisions"}],"predecessor-version":[{"id":38080,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/10634\/revisions\/38080"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/10635"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=10634"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=10634"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=10634"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}