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Deposit Insurance and Credit Guarantee Corporation (DICGC)
Context: DICGC takes 30 days on average to reimburse insured depositors, double the global average, due to data quality issues, identification challenges, and lack of alternative bank accounts, per RBI Deputy Governor.
Deposit Insurance
- Deposit insurance is a special type of insurance that protects depositors against loss in the event of a bank failure.
- It was developed in the United States during the Great Depression to address the issues caused by frequent bank suspensions.
- It can enhance financial stability, if properly funded and supported by additional measures, such as a robust bank supervision program.
Deposit Insurance and Credit Guarantee Corporation (DICGC)
- Formed in 1978, by merging Deposit Insurance Corporation (DIC) and Credit Guarantee Corporation of India Ltd. (CGCI)
- It is a wholly-owned subsidiary of the Reserve Bank of India (RBI) that provides deposit insurance to protect bank depositors.
- Maximum deposit amount insured is ₹5 lakh per depositor per bank, covering both principal and interest.
- As of March 2024, DICGC covers 1,997 banks, including 140 commercial banks and 1,857 cooperative banks.
- Around 97.8% of deposit accounts are fully insured by DICGC.
- It insures all kinds of deposit accounts such as:
- Savings, fixed, current, recurring, etc. held by commercial banks, local area banks, regional rural banks, and cooperative banks.
- Deposit insurance premium is paid by insured banks, not the depositors.
- DICGC directly pays the insured amount to the liquidator or transferee bank in case of a bank failure or amalgamation, not directly to the depositors.
- Deposits in different banks are insured separately, but deposits held in different capacities (self, joint, etc.) at the same bank are aggregated for the insurance limit.
- Functions of the DICGC are governed by provisions of
- Deposit Insurance and Credit Guarantee Corporation Act, 1961′ (DICGC Act)
- Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961.
- Mission: To contribute to financial stability by securing public confidence in the banking system through provision of deposit insurance.
- Vision: To be recognised as one of the most efficient and effective deposit insurance providers, responsive to the needs of its stakeholders.
- Head Office: Mumbai
