Deposit Insurance and Credit Guarantee Corporation (DICGC)

Read everything about Deposit Insurance and Credit Guarantee Corporation (DICGC). How it was established and what are its functions.

| Updated On May 15th, 2020 at 08:29 pm

Recently, Union Finance Minister Nirmala Sitharaman in her budget speech 2020 has proposed to hike the bank deposit insurance in scheduled commercial banks to Rs 5 lakh per depositor from the current Rs 1 lakh which was not hiked since a long time and was  much needed to restore the faith of the customers in banks.

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Currently, as per the RBI guidelines, the deposits of all the customers with commercial banks and cooperative banks are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC). Only Primary Cooperative Societies are not covered under DICGC. It means that when a bank will run out of money or will be bankrupt then upto 5 lakh rupees of  a customer money will be insured and not more than that. 

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Let’s Understand this with an example:

If you have 5000 deposit in a bank and that bank go bankrupt in future then you will be given 5000 from DICGC.

If you have 6 lakh deposit in a bank account and  that bank go bankrupt in future then you will be given 5 lakh from DICGC because this is the maximum limit.


DICGC was established on 15th July 1978. It was in the year 1948 that the concept of insuring deposits kept with banks received attention for the first time after the banking crises in Bengal. In 1949 it was again came in the limelight for the reconsideration. It was in 1950 the Rural Banking Enquiry Committee also supported the concept. It was after the crash of palai central bank ltd. that serious thought to the concept was given by the Reserve Bank of India and the Central Government in 1960.

It was in August 21, 1961 that the Deposit Insurance Corporation (DIC) Bill was introduced in the Parliament.  After it was passed by the Parliament, the Bill got the assent of the President on December 7, 1961 and the Deposit Insurance Act, 1961 came into force on January 1, 1962. 

The functioning of the scheme was initially extended  commercial banks only whic also  included the State Bank of India and its subsidiaries, other commercial banks and the branches of the foreign banks operating in India.

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Functions Of DICGC

  • Its primary function   is to provide insurance of the deposited Money in all banks.
  • It provide insurance facility for all type of  Saving deposit , Fixed deposit , Recurring deposit up to a maximum limit of 5 Lakh for each separate deposits in a bank.
  • The deposits with Regional Rural Bank (RRB) are also covered by DICGC.
  • All Scheduled commercial Banks & Cooperative Banks are covered under DICGC
  • It also covers the insurance of  foreign banks which is running in India also be covered under DICGC.
  • It also covers the insurance of  Indian Banks which is functioning outside India.
  • Primary Agricultural Credit Society, Cooperative banks from Meghalaya , Chandigarh , Lakshadweep & Dadra & Nagar Haveli are some of the exception which are not covered by DICGC

Types of Deposit covered under DICGC –

  • Saving Bank Deposits
  • Fixed deposits
  • Recurring deposits
  • It also include some exception which is listed below –
  • It won’t accept Deposits for Foreign Governments
  • The deposits by Indian Government & State Govt. also not accepted under this Act.

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