We all have Bank Accounts in various banks, these accounts and banks hold our lifelong savings. The value of that amount is significant for all of us from being psychological support to monetary needs in the future and presents that bank accounts have the saved money. But as we know banks too lend this money of ours to business houses and invest these deposits in various financial markets. Like any business banks too are liable to the normal cycle of economic or ups and down in business. Do you wonder what happens to our savings in case the Banks run into a rough phase, is your life-long saving insured in case a bank faces issues in repaying money? In India keeping in mind the interest of the common man, the Indian Government has created the Deposit Insurance and Credit Guarantee Corporation (DICGC) through DICGC Act, of 1961. Here in this artilce, we have covered all the information on Deposit Insurance and Credit Guarantee Corporation (DICGC).
Deposit Insurance and Credit Guarantee Corporation (DICGC)
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 again came into the limelight for 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, of 1961 came into force on January 1, 1962.
The functioning of the scheme was initially extended to commercial banks only which also included the State Bank of India and its subsidiaries, other commercial banks, and the branches of the foreign banks operating in India.
Deposit Insurance and Credit Guarantee Corporation: Insured Amount
With the announcement through the budget of 2020 and subsequent amendments to the DICGC Act, of 1961. The insured amount for all types of deposits has been increased to 5 Lakh from the earlier initial insured amount of 1 Lakh. You must know for all types of bank accounts the DICGC Act, 1961 has insured 5 Lakh in any eventuality. The DICGC charges a premium amount from banks for this insured amount. The insurance is available for each bank account.
Let’s Understand this with an example:
If you have a 5000 deposit in a bank and that bank goes bankrupt in the future then you will be given 5000 from DICGC.
If you have a 6 lakh deposit in a bank account and that bank goes bankrupt in the future then you will be given 5 lakh from DICGC because this is the maximum limit.
Functions Of DICGC
- Its primary function is to provide insurance of the deposited Money in all banks.
- It provides 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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