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What is DICGC?
DICGC or Deposit Insurance and Credit Guarantee Corporation is a wholly-owned subsidiary of the Reserve Bank of India. This corporation was built to provide insurance of deposits and also, to solidify the credit facilities in India.
What is the maximum insurance amount provided by DICGC?
You are insured for up to Rs. 5 lakh (principal + interest) in a scheduled bank. It can be a commercial bank like SBI or HDFC Bank or it can be a small finance bank like Fincare or Suryodaya.
Case 1: You have Rs. 4.5 lakh in a bank and have earned an interest of Rs. 15,000 on it. The bank defaults. DICGC will pay you a total of Rs. 4.65 lakh.
Case 2: You have Rs. 5 lakh in a bank. You earned an interest of Rs. 25,000 on it. The bank defaults. DICGC will pay you a total of Rs. 5 lakh.
Case 3: You have Rs. 6 lakh in a bank. You earn an interest of Rs. 50,000 on it. The bank goes insolvent. DICGC will pay you a total of Rs. 5 lakh.
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What is covered in the DICGC insurance?
Money kept in the following is insured by DICGC:
- Savings account
- Fixed deposit account
- Savings account
- Recurring account
(This is not an exhaustive list)
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What is not covered in the deposit insurance by DICGC?
The following types of deposits are not insured by DICGC:
- Foreign Governments deposits
- Central/State Government deposits
- Inter-bank deposits
- Deposits of the State Land Development Banks with the State co-operative bank
- Any amount due on account of and deposit received outside India
- Any amount, which has been specifically exempted by the corporation with the previous approval of Reserve Bank of India
Are the company/corporate fixed deposits covered by DICGC?
No. DICGC deposit insurance is solely for banks. Non-banking financial companies (NBFCs) do not come under its umbrella.
Read More: Company/Corporate Fixed Deposits
What if I have different FDs in different banks?
All your deposits in a bank are covered for up to Rs. 5 lakh. Similarly, if you simultaneously invest in another bank, that amount will also be covered separately.
Let’s understand this with an example:
You have 3 FDs in 3 different banks, say, SBI (Rs. 1 lakh), Yes Bank (Rs. 4.5 lakh) and Kotak Mahindra Bank (Rs. 5 lakh). Now, Yes Bank and Kotak Mahindra Bank all go into liquidation (which is very unlikely). DICGC will pay you Rs. 4.5 lakh for your deposits in Yes Bank and Rs. 5 lakh for your deposits in Kotak Mahindra Bank.
What if there is more than one account in the same bank?
In case of more than one account in the same bank, whether it’s a combination of savings and fixed deposit account or the same type of accounts, the insurance coverage will be paid a total of Rs. 5 lakh and not separately per account. This coverage is provided per bank and not per account type.
In case of Joint Accounts
In case of a person holding two accounts in a bank, one individually and the other as a joint account, then DICGC shall be paying the compensation of Rs. 5 – 5 lakh separately to each depositor. Here, these accounts shall be held in different capacities and different rights.
Suppose, Mrs Arya has three accounts in, let’s say, DBS Bank, viz. a salary account (balance of Rs. 2.5 lakh), an FD account (Rs. 5 lakh) and a joint account, with her husband being the prime holder (balanced at Rs. 2.5 lakh). Now, unfortunately, the bank goes into liquidation. Mrs Arya’s salary account and FD account shall be treated as one, i.e. in the same capacity and right. Thus, DICGC shall be paying Rs. 5 lakh to Mrs Arya and Rs. 2.5 lakh to her husband, separately.
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Frequently Asked Questions (FAQs)
Does the interest accrued on a deposit also covered by the deposit insurance?
Yes. DICGC covers both the principal as well as the interest accrued. However, the total of the principal and interest cannot cross Rs. 5 lakh. If the principal itself is Rs. 5 lakh, the interest on it will not be covered.
Do I have to pay for the deposit insurance?
No. the cost of deposit insurance is borne solely by the insured bank.
When does DICGC come into the picture?
DICGC becomes liable to pay when an insured bank goes into liquidation. The bank provides the DICGC the claim list. Within 2 months of receipt of this claim list, the DICGC pays the total insurance amount to the liquidator. After this, it becomes the responsibility of the liquidator to proportionately disburse this amount to each insured depositor.
Can my bank withdraw from the DICGC coverage?
DICGC coverage is not a choice. It is compulsory. Therefore, no bank can withdraw from it.
How would I know if my bank deposit is insured by the DICGC?
Although it is established that all the commercial banks and cooperative banks are insured by the DICGC, in case of doubt, you must enquire about it with the bank’s official. Also, most of the times, in case of a fixed deposit, it will be clearly mentioned on your Fixed Deposit Receipt or FDR.
48 Comments
Is 5 lakhs in a single branch OR one bank. ie if I have deposit in 4 different branches of SBI will I get subject to maximum 20 lakhs. 5 X 4 20 1lakhs
Hi Ramaswamy,
Rs. 5 lakh is for all types of deposits in one bank. If you have deposits in 4 different branches of SBI, you will be entitled to a total of Rs. 5 lakh insurance.
There are two types of joint accounts as under. One Fd in my name a first holder,with joint holde as my wife. Another fd in my wife as first holder and myself as joint holder. Whether both are eligible for compensation separately on these two types of fd.
Hi, H N Kulkarni
Both the FDs will be separately covered. This is because in both cases, the accounts are held in a different capacity and different right.
BANK COLLECT ANY CHARGES FROM DEPOSITORS FOR THIS INSURED AMOUNT OF DEPOSIT?
No. This insurance is provided by DICGC (Deposit Insurance and Credit Regulation Corporation) which is a subsidiary of RBI. Thus, banks do not charge anything from depositors against this deposit insurance.
Utkarsh small finance bank covered by dicgc ?
Yes. Deposits made in small finance banks are covered by the DICGC.
is small finance bank is also covers 5 lakhs deposit insurance per account holder or not ?
When exactly DICC comes into picture. The RBI has only stopped banking transaction and directed to pay rs.35000 per account holder. Whether it has to declare bank as defunct and then DICGC starts compensating.
The Rs. 35,000 restriction you talked about is related to one co-operative Sri Gururaghavendra Sahakara Bank Niyamitha in Bengaluru, Karnataka. Thus, it is not applicable across the banks by RBI. Also, DICGC comes into the picture as soon as you make your FD with a bank. If unfortunately, the bank you’ve invested your money in, goes insolvent, DICGC will step in and make a list of all the claimants. Post-revision, all the claimants will be awarded their due compensations, i.e. up to R.s 5 lakh. The process takes place in stipulated time.
Is small finance bank covered under this insursnce.
Yes, deposits made in small finance banks are covered by the DICGC (Deposit Insurance and Credit Guarantee Corporation of India).
Yes. Deposits made in small finance banks are covered under DICGC insurance of Rs. 5 lakh.