DICGC Deposit Insurance: ₹5 Lakh Cover and Claim Timelines
Why in the news
The Union government was weighing a rise in bank deposit insurance from ₹5 lakh to possibly ₹10 lakh, while DICGC began verifying claims of 55 insured Urban Co-operative Banks under All Inclusive Directions (AID) so depositors get paid within 90 days.
About DICGC
| Feature | Detail |
|---|---|
| Set up | 15 July 1978 |
| Act | DICGC Act, 1961 |
| Ownership | Wholly owned by RBI |
| Cover | ₹5,00,000 per depositor, principal plus interest |
| Deposits | Savings, fixed, current, recurring |
Banks covered
- Insured: all commercial banks (including foreign bank branches), RRBs, Local Area Banks, and urban, state and central co-operative banks.
- Not insured: primary cooperative societies, deposits of foreign, central and state governments, inter-bank deposits, deposits from outside India, and Land Development Banks with state co-operative banks.
Claim process
- Bank goes under moratorium or liquidation.
- Liquidator submits the insured depositor list within 3 months.
- DICGC pays within 2 months of receiving the verified list.
- The bank then repays DICGC.
DICGC (Amendment) Act, 2021
- Section 18A: interim payment up to ₹5 lakh when a bank is restricted; effective 1 September 2021.
- Timeline: 45 days for the bank’s list, 30 days for DICGC verification and consent, 15 days for payment.
- Applies to past and future restrictions under the Banking Regulation Act, 1949; not if RBI lifts restrictions or the bank can repay on its own.
- RBI may grant a 90-day extension while a reconstruction or merger scheme is pending.
- Premium: paid yearly by insured banks, capped at 0.15% of deposits (higher with RBI approval); late repayment to DICGC attracts penal interest up to 2% above repo.
Exam angle
- Insurance limit: ₹5 lakh; payout window: 90 days; Section 18A: interim payments.