Deposit Insurance
Deposit Insurance and Credit Guarantee Corporation (DICGC) was set up by RBI with the intention of insuring the deposits of individuals. The deposit insurance scheme covers:
• All commercial banks, including branches of foreign banks operating in India, and Regional Rural Banks
• Eligible co-operative banks.
The insurance scheme covers savings account, current account, term deposits and
recurring accounts. However, the following deposits are not covered by the scheme:
• Deposit of Central / State Government
• Deposit of foreign governments
• Inter-bank deposits
• Deposits received outside India
In order for depositers in a bank to benefit from the insurance scheme, the bank should have paid DICGC the specified insurance premium (10 paise per annum per Rs. 100 ofdeposit).
Under the Scheme, in the event of liquidation, reconstruction or amalgamation of an
insured bank, every depositor of that bank is entitled to repayment of the deposits
held by him in the same right and same capacity in all branches of that bank upto an
aggregate monetary ceiling of Rs. 1,00,000/- (Rupees one lakh). Both principal and
interest are covered, upto the prescribed ceiling.
A few points to note:
• Suppose Mr. X has one account in his individual capacity, another account jointly with wife, a third account jointly with wife and son/daughter, and a fourth account as partner of a firm. Each of these would be treated as being in a different right and capacity.
Therefore, for each of these accounts, insurance cover of Rs. 1,00,000 is available i.e.
the insurance cover could go upto Rs. 4,00,000
• Since the monetary ceiling is applicable for all branches of a bank put together, splitting the deposit between different branches of the same bank does not help.
• If Mr. X maintains an account in his individual capacity in different banks (not different branches of the same bank), then insurance cover of Rs. 1,00,000 will be available in each such bank.
