The Deposit Insurance and Credit Guarantee Corporation (DICGC), in a notification issued last week, has advised all insured banks to display the DICGC logo and QR codes on their websites and the Netbanking portal. It is to be complied with effect from September 1, 2023.
The purpose of DICGC is to protect customers’ interests, especially the small depositors, and instil and enhance their confidence in the banking system. The DICGC logo would make it easy for the customers to know which bank is covered under it, besides getting access to critical information timely.
Under the DICGC insurance, depositors are secured for up to Rs 5 lakh in bank deposits. This covers commercial banks, including the branches of all foreign banks operating in India, small financial banks (SFB), regional rural banks (RRB), local area banks (LAB), payment banks (PB), and co-operative banks, among others.
What Is Covered Under DICGC?
The DICGC scheme applies to all savings and current account deposits, fixed and recurring deposits (FD and RD), but does not cover inter-bank deposits, deposits of state, central and foreign government, any ‘amount due on account of any deposit received outside India’, and State Land Development Bank deposit. This also does not include any amount DICGC has exempted with the previous approval of the RBI.
How Much Is Covered?
A depositor is insured for an amount of Rs 5 lakh in all the approved deposits in a bank. The insurance amount includes both the principal and the interest amount, which also includes the accrued interest.
Thus, if you have deposits in different branches of the same bank, all of such deposits will be added together to determine the insurance cover of up to Rs 5 lakh by the DICGC.
Another important thing to note is ownership. The funds held in the same type of ownership will only be aggregated for the purpose of insurance. So, if the funds are in different banks or with different types of ownership, these deposits will be separately insured.
The deposit insurance and credit guarantee, which initially started with a cover limit of Rs 1,500, was increased to Rs 5,000 effective January 1, 1968. It has been enhanced several times later and reached the current limit of Rs 5 lakh, effective February 4, 2020.
Premium And Claim: If you wonder what you have to pay for the deposit insurance, do remember that the premium for this insurance has to be borne by the insured bank and not by the depositors. The banks are not allowed to pass on the premium expenditure to the depositors. This insurance cover is used when the bank is liquidated, the license is cancelled, or in circumstances, such as amalgamation. In such cases, DICGC has a liability to pay up to Rs. 5 lakh for each depositor.
As of July 13, 2023, there were a total of 2,020 banks insured with DICGC, which includes 12 public sector banks, 21 private sector banks, 12 small finance banks, 44 foreign banks, six payment banks, and 43 regional rural banks.
According to RBI’s annual report 2022-23, there were fully protected 2.94 billion accounts as on March 31, 2023, which is 98.1 per cent of the total 3 billion accounts.
