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DICGC: deposit insurance explained
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DICGC stands for the Deposit Insurance and Credit Guarantee Corporation. It is a wholly owned subsidiary of the RBI that insures bank deposits, so that if an insured bank fails, depositors get back their money up to a fixed limit. It was formed on 15 July 1978 by merging the Deposit Insurance Corporation and the Credit Guarantee Corporation of India, and works under the DICGC Act, 1961.
How much is insured
The insurance cover is ₹5 lakh per depositor per bank, covering principal and interest together. It has been ₹5 lakh since 4 February 2020, up from ₹1 lakh, which had been the limit since 1993. Check dicgc.org.in for any revision.
"Per bank" means that if you hold deposits in two different banks, each is insured up to ₹5 lakh separately. Within one bank, all your deposits in the same capacity and same right are added together before applying the limit.
What is covered
Savings, fixed, current and recurring deposits at insured banks, which include commercial banks, small finance banks, payments banks, regional rural banks, local area banks and cooperative banks (in states whose cooperative laws allow it).
What is not covered
- Deposits of the central and state governments
- Deposits of foreign governments
- Inter-bank deposits
- Deposits received abroad
- Deposits that are specifically exempted by DICGC with RBI approval
Worked example
Ravi has a savings account of ₹3 lakh and a fixed deposit of ₹4 lakh in the same bank, both in his own name. Total ₹7 lakh, but insured cover is ₹5 lakh, so ₹2 lakh is at risk if the bank fails. If he moves ₹3 lakh to a second bank, both banks' balances are fully insured. A joint account with his wife is a different capacity, so it gets its own ₹5 lakh cover.
Faster payouts
After amendments in 2021, if the RBI imposes restrictions on a bank, DICGC must pay depositors the insured amount within 90 days. Deposit insurance does not apply to NBFC deposits; see the NBFC entry.
How bank exams ask about it
Common stems: "DICGC is a subsidiary of", "the insurance cover per depositor", "which deposits are not covered", and "the 90-day rule". Cover amount questions appear often in current affairs. Place it in banking awareness with other safety nets.
Frequently asked questions
Do I need to pay a premium for DICGC insurance?
No. Insured banks pay the premium to DICGC. Depositors do not pay anything extra.
Are cooperative bank deposits insured?
Yes, where the bank is registered with DICGC. Check the DICGC site.
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