DICGC – Deposit Insurance And Credit Guarantee Corporation

Posted on Monday, September 9th, 2024 | By IndusInd Bank

DICGC stands for Deposit Insurance and Credit Guarantee Corporation. The DICGC was established in 1978 as a wholly owned subsidiary of the Reserve Bank of India (RBI). Its main aim is to provide insurance coverage to depositors. It ensures that their deposits are protected in the event of a bank’s failure.  

SO, let’s learn more about what DICGC is and its importance.  

What is DICGC and How Does it Work?

Here’s how the DICGC works: 

1. The DICGC provides insurance cover up to ₹5 lakhs per depositor per bank. This includes both principal and interest amounts. The insurance covers savings accounts, fixed deposits, current accounts, and recurring deposits. 

2. Banks must pay a premium to the DICGC for this insurance coverage. Note that the premiums are borne by the banks and not the depositors.  

3. The DICGC steps in to settle claims if a bank fails. Depositors are reimbursed up to the insured limit of ₹ 5 lakhs within a stipulated time frame. This process ensures that depositors get back at least a portion of their funds without delays. 

4. The DICGC covers all commercial banks, including branches of foreign banks functioning in India. It also covers all local area banks, regional rural banks, and cooperative banks. 

5. There are certain deposits and situations that the DICGC does not cover: 

• Deposits of foreign governments    

• Inter-bank deposits    

• Deposits in Non-Banking Financial Companies (NBFCs) 

• Deposits exceeding the DICGC limit of ₹ 5 lakhs. 

Now that you know what DICGC is in banking, let’s look at some commonly asked questions.  

FAQs on DICGC

Here are answers to some frequently asked questions about the Deposit Insurance and Credit Guarantee Corporation:  

1. What is the maximum insurance coverage provided by DICGC?

The DICGC provides insurance coverage up to ₹5 lakh per depositor per bank across all existing accounts.  This is inclusive of principal and interest amounts.  

For instance, if the individual had ₹2.5 lakh in their bank account at the time of the bank’s liquidation, the DICGC will pay the ₹ 2.5 lakhs only.   

However, if an individual had ₹5 lakhs in their bank account and the accrued interest was ₹4,500, the depositor would receive ₹5 lakhs only. Any principal or interest amount above ₹ 5 lakhs is not covered. 

2. How does DICGC handle claims in case of a bank failure?

In the event of a bank failure, the DICGC pays the liquidator (bank) up to ₹ 5 lakhs per depositor within two months of receiving the claim list. The liquidator then disburses the DICGC insurance cover amount to each insured depositor. 

3. Does the DICGC directly deal with depositors of failed banks? 

No. The DICGC deals with the liquidator in case of bank liquidation, who prepares and submits a depositor-wise claim list.  

In cases of amalgamation or merger, payments are made to the transferee bank, not directly to depositors. 

4. How can I check if my bank is insured by DICGC?

Most commercial banks and cooperative banks in India, including IndusInd Bank, are insured by the DICGC. You can check the DICGC’s official website or inquire with your bank to confirm its insurance status.  

5. If I have deposits in different banks, are all deposits separately insured?

Yes. The Deposit Insurance and Credit Guarantee Corporation has separate insurance coverage for deposits held in different banks.  

Also Read: What is the Cash Deposit Limit in a Savings Account? 

Conclusion

The DICGC is an important institution providing essential protection to depositors. It ensures that funds are secure even in the event of a bank failure.  

For safe and secure banking, consider opening a Savings Account with IndusInd Bank. Enjoy the benefits of comprehensive deposit protection, competitive interest rates, feature-rich debit cards, superior banking services, and more.  

Open a Savings Account online with IndusInd Bank today!  

Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.