Deposit Insurance Credit Guarantee Corporation (DICGC) Bill
- Cabinet approves amendment to Deposit Insurance Credit Guarantee Corporation (DICGC) Bill to provide account holders access to up to Rs 5 lakh funds within 90 days of bank failure.
- The government had last year raised insurance cover on bank deposit by five-folds to Rs 5 lakh to provide support to the depositors of struggling lenders like Punjab and Maharashtra Co-operative (PMC) Bank. Following the collapse of PMC Bank, private sector lender Yes Bank and Laxmi Vilas Bank too came under stress, leading to restructuring by the regulator and the government.
- The DICGC Bill insures all bank deposits and covers all commercial banks, even foreign bank branches in India are covered under it.
- Under the DICGC, each depositor’s bank deposit is insured up to Rs 5 lakh in each bank (for both principal and interest).
- The increase of insured amount from Rs 1 lakh to Rs 5 lakh will cover 98.3 per cent of all deposit accounts and 50.9 per cent of deposit value.
Deposit Insurance and Credit Guarantee Corporation
- DICGC came into existence in 1978 after the merger of Deposit Insurance Corporation (DIC) and Credit Guarantee Corporation of India Ltd. (CGCI) after passing of the Deposit Insurance and Credit Guarantee Corporation Act, 1961by the Parliament.
- It serves as a deposit insurance and credit guarantee for banks in India.
- It is a fully owned subsidiary of and is governed by the Reserve Bank of India
- DICGC charges 10 paise per ₹ 100 of deposits held by a bank. The premium paid by the insured banks to the Corporation is paid by the banks and is not to be passed on to depositors.
- Banks, including regional rural banks, local area banks, foreign banks with branches in India, and cooperative banks, are mandated to take deposit insurance cover with the DICGC.
- Normally, it takes 8-10 years after complete liquidation to get money under insurance; but now, even if there is a moratorium, within 90 days, the process will definitely be completed, giving relief to depositors, the finance minister said.
- It will foster the confidence in household small depositor against the backdrop of multiple bank collapse in recent time.