Deposit & Credit Insurance

Deposit Insurance and Credit Guarantee Corporation, Act 1961 (DICGC)

Wholly owned subsidiary of the Reserve Bank of India

The concept of insuring deposits kept with banks received attention for the first time in the year 1948 after the banking crises in Bengal, and two Banks failing in 1960s. The Deposit Insurance Corporation (DIC) Bill was introduced in the Parliament on August 21, 1961 and came into force on January 1, 1962. The Deposit Insurance Scheme is offered to all the commercial banks Public, Private & Foreign banks and NBFCs operating in India.

 Wholly owned subsidiary of the Reserve Bank of India

Facts & Figures - DICGC

Deposit insurance, was introduced in India in 1962. India was the 2nd country in the world to introduce the deposit insurance scheme. The 1st being the United States in 1933.

Amount Deposited Insured upto Rs.100,000/ No. of Bank Insured - 2199

Calculation of Deposit Insurance Coverage

The DICGC insures principal and interest upto a maximum amount of Rs. One lakh. For example, if an individual had an account with principal amount of Rs.95,000/+ accrued interest of Rs.4,000/ The total amount insured by the DICGC would be Rs.99,000.

Cost of Deposit Insurance

Rs. 0.05 per Rs. 100 per annum w.e.f. 1-10-1961 Rs. 0.04 per Rs. 100 per annum w.e.f. 1-10-1971 Rs. 0.08 per Rs. 100 per annum w.e.f. 1-4-2004 Rs. 0.10 per Rs. 100 per annum w.e.f. 1-4-2005. maximum premium of up to Rs. 0.15 per Rs. 100 per annum The premium is collected at half-yearly intervals. The banks are required to bear this fee so that the protection of insurance in available to the depositors free of cost.

Illustrations - I
Savings A/C Current A/C FD A/C Total Deposits Mr. Oscar (Individual) Mr. Oscar (Partner of ABC & Co.) Mr. Oscar (Guardian for Oscar Junior) 7,800 17,200 22,000 75,000 80,000 50,000 80,000 1,19,200 1,25,000 87,800 Deposits Insured upto 1,00,000 1,00,000 87,800

Mr. Oscar (Director, Global Oscar Ltd.)

Mr. Oscar jointly with Mrs. Oscar 7500

2,30,000
1,50,000

45,000
50000

2,75,000
2,07,500

1,00,000
1,00,000

Illustrations - II
First a/c holder- "A" Second a/c holder - "B" First a/c holder - "A" Account (ii) Second a/c holder - "C" First a/c holder - "B" Account (iii) Second a/c holder - "A" First a/c holder - "A" Account (iv) at Branch X of the bank Second a/c holder - "B" Third a/c holder - "C" First a/c holder - "B" Account (v) Second a/c holder - "C" Third a/c holder - "A" Account (vi) First a/c holder - "A" (Recurring or Fixed Deposit) Account (vii) At Branch Y of the bank Second a/c holder - "B" Account (i) (Savings or CurrentA/C) Maximum insured amount upto Rs.1 lakh Maximum insured amount upto Rs.1 lakh

Maximum insured amount upto Rs.1 lakh

Maximum insured amount upto Rs.1 lakh

Maximum insured amount upto Rs.1 lakh

The account will be clubbed with the a/c at (i)

Account (viii)

First a/c holder - "A" Second a/c holder - "B" The account will be clubbed with the a/c at (iv) Third a/c holder - "C" First a/c holder - "A" Second a/c holder - "B" Maximum insured amount upto Rs.1 lakh Third a/c holder - "D"