Introduction: DICGC, located at Mumbai, provides insurance on deposit to banks with various terms and conditions. The functions of the DICGC 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. These regulations have been framed by the Reserve Bank of India in exercise of The powers conferred by sub-section (3) of Section 50 of the said Act.

The preamble of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 states that it is an Act to provide for the establishment of a Corporation for the purpose of insurance of deposits and guaranteeing of credit facilities and for other matters connected therewith or incidental thereto. The authorized capital of the Corporation is Rs.50 crores, which is fully issued and subscribed by the Reserve Bank of India (RBI). The Corporation is headed by Chairman who is Dy Governor of Reserve Bank of India.

Insurance Cover: Banks can get insurance cover on all deposits like saving, fixed, current, recurring, etc. Since 1993 insurance has been provided up to an amount of Rs.5.00 lakhs. The DICGC is to make payment within 2 months of receiving the claim.

Premium: The premium payable by banks to the corporation is 12 paise for Rs.100.00 (The premium has been revised from 10 paise per Rs. 100.00 subsequent to increase in cover from Rs 1 lakh to Rs. 5 lakhs), payable in two installments each by last working day of May and November of each year. In case of the last working day as being a holiday, the preceding day is considered the last working day. The premium is paid in advance i.e. if the bank is paying premium by May 2020 it covers deposit from 01.04.2020 to 30.09.2020.

Return: The banks are required to submit DI return within one month of the HY. If the insured bank fails to furnish Di-Returns within the above prescribed time limit, it shall be punishable with fine up to Rs.2000.00 for each such offence and additional fine up to Rs.100/per day during which the failure continues after conviction for the first such failure.

Settlement of Claim: In case a bank is liquidated or wound up, every depositor of the bank registered with DICGC, will get payment equal to his deposits held by him in the same right and in the same capacity in all the branches of that bank put together. However, this will be subject to a maximum limit of Rs.5.00 lakhs. This amount will be calculated as outstanding on the date of cancellation of registration i.e. date of cancellation of license or order for winding up of the bank or liquidation.

Now, say a bank fails and a scheme of amalgamation, merger takes place where the depositor’s complete deposits are not fully protected. In such a case, the DICGC will pay the difference between the full amount of deposit or the limit of insurance cover in force at the time, whichever is less, and the amount actually received by him under the scheme.