Protection
for Bank Depositors
Bank
deposits up to Rs.100000.00 (Rupees One Lakh Only) in respect of each depositor
are fully protected by the Deposit Insurance and Credit Guarantee Corporation
under the Deposit Insurance Scheme. The Scheme covers all commercial banks
(including Regional Rural Banks) operating in
The Corporation’s
liability in respect of insured deposits will arise in the following cases:
·
If a Bank goes into liquidation:
The Corporation will arrange to pay to every depositor directly or through the
liquidator the amount due to him under the insurance scheme.
·
If a bank is reconstructed or amalgamated with another bank and the scheme the scheme of
reconstruction or amalgamation does not entitle a depositor to get credit for
the full amount of his deposit: The Corporation will arrange to pay the
reconstructed bank or the amalgamated bank an amount equivalent to the
shortfall between the amount due to the depositor under the insurance scheme
and the amount of deposit of credit received by him under the scheme of
reconstruction or amalgamation
DEPOSIT INSURANCE AND CREDIT GUARANTEE
CORPORATION
DEPOSIT
INSURANCE DEPARTMENT
NEW
POST
BOX NO. 1076, MUMBAI – 400 039.
DICGC/DID/05.03.01.07/144/93/94 31ST MAY, 1993
To,
The Chief
Executive Officers,
Of
all insured banks
Dear
Sir,
Deposit Insurance and Credit Guarantee Corporation Act 1961 –
Increase in the limit of Deposit Insurance Cover and rate of premium
1.
We reproduce on the reverse, for your
information, a copy of the press communiqué issued by the Deposit Insurance and Credit Guarantee
Corporation regarding enhancement of the limit of insurance cover in respect of
amounts due to a depositor of an insured bank from Rs. 30,000/- to Rs.
1,00,000/- with effect from 1st May 1993.; Thus in terms of
Section 16 of Deposit Insurance and Credit Guarantee Corporation Act, 1961, the
limit of the total amount payable by the Corporation to any one depositor in
respect of his/her deposits with an insured bank in the same right and capacity
shall be Rupees One Lakh from the said date.
2.
It may be noted that where the Corporation has
already incurred liability before 1st May 1993, the limit of
insurance covers of Rs. 30000/- as in force up to that date continues to be
applicable.
3.
The rate of premium payable by the insured banks
has also been marginally raised from 4 paise to 5 paise per Hundred Rupees per
annum. A circular in this regard is being issued separately.
4.
In case your bank has in stock any publicity
leaflets obtained from us, you may make necessary alterations before displaying
the same to the public.
5.
In view of the enhanced insurance cover the
annual return in Form DI-02 required to be compiled by your bank as on the last
working day of June will have to be submitted to us in the revised proforma
enclosed.
6.
Please acknowledge receipt.
Yours
faithfully,
(S.K.
KAPUR)
General
Manager
Encl:
One
April
30, 1993
Limit
of Insurance Coverage for Bank
With
a view of providing a greater measure of protection to bank’s depositors, the
Deposit Insurance and Credit Guarantee Corporation has raised the limit of
Insurance cover for the deposits in an Insured bank from Rs. 30000/- to Rs.
100000/- with effect from 1 May 1993. The present limit of Rs. 30,000/- per
depositor was fixed in July 1980 when it was raised from the previous level of
Rs. 20,000/-
The
enhancement insurance cover will apply in the case of any liquidation or
winding up of an insured bank on or after 1 May 1993 and compromise or
arrangement of reconstruction or amalgamation of any insured bank sanctioned on
or after the date not providing for payment of amounts due to its depositors.
Where, however, the Corporation has already incurred any liability before 1
May, 1993, the existing limit of Rs. 30000/- of insurance cover will continue
to be applicable.
The
premium payable by the insured bank on their assessable deposits has also been
marginally raised from four paise at present to five paise per Rs. 100/- per
annum with effect from 1 July 1993.
FAQs
DEPOSIT
INSURANCE AND CREDIT GUARANTEE CORPORATION (DICGC)
DICGC is a wholly owned
subsidiary of the Reserve Bank of India, Since 1962, it is engaged in providing
deposit insurance for depositors of banks against loss of part or all of their
deposits arising from bank failures. Deposit Insurance is compulsory as well as
automatic for the bank and thus no bank can remain uninsured by the DICGC
except those cooperative banks where the concerned State Governments are yet to
pass the required legislation. The purpose of this brochure is to explain the
deposit insurance coverage that DICGC provides.
1. Which
banks are insured by DICGC?
All
commercial banks, including branches of foreign banks functioning in
All
State, Central and primary cooperative banks, also called urban cooperative
banks, functioning in States which have amended the local Co-operative Societies
Act empowering the Reserve Bank to order the Registrar of Cooperative Societies
of the State to liquidate, amalgamate or reconstruct a cooperative bank and to
supersede its committee of management, are insured by DICGC. At present all
States other than the State of
Primary
cooperative societies are not insured by DICGC.
2. What
does DICGC insure?
DICGC insures all
deposits such as savings, fixed, current, recurring, etc. deposits except the
following types of deposits
(i) Deposits of foreign
Governments
(ii) Deposits of State / Central Governments
(iii) Inter-bank deposits
(iv) Certificates of deposit
(v) Deposits of the stat
land development banks with the stat cooperative banks
(vi) Deposits taken as cash collaterals
(vii) Deposits which are created by transferring
subordinated liabilities, at least 6 months prior to a bank failure or
moratorium, whichever is earlier and
(viii) Deposits held abroad.
3. What is the maximum deposit amount insured by DICGC?
Each depositor in a
bank is insured up to a maximum of Rs.1,00,000 (Rupees One Lakh ) for both principal and interest
amount held by him in the same right and capacity as on the date of
liquidation/cancellation of bank’s licence.
4. How will you know whether your bank is insured by DICGC or not?
DICGC while registering
the banks as insured banks advises them to display prominently at their
branches that the depositors’ money up to Rupees on lakh is insured by DICGC.
Besides, the banks are also required to indicate in the account opening forms
the extent of insurance cover available to the depositor. In case of doubt, depositor should make
specific enquiry from the branch official in this regard.
5. What
is the ceiling on amount of insured deposits kept by one person in different
branches of a bank?
The
deposits kept in different branches of a bank are aggregated for the purpose of
insurance cover and a maximum amount up to Rupees on lakh is paid.
6.
Does DICGC insure just the principal on an
account or both principal and accrued
interest?
DICGC insures principal
and interest up to a maximum amount of Rs. One lakh. For example, if an individual had an account
with a principal amount of Rs.95000 plus accrued interest of Rs.4000 the total
amount insured by the DICGC would be Rs.99000.
If, however, the principal amount in that account was Rs. One lakh, the
accrued interest would not be insured, not because it was interest but because
that was the amount over the insurance limit.
7. Can
deposit insurance be increased by depositing funds into several different
accounts all at the same bank?
No. All funds held in
the same type of ownership at the same bank are added together before deposit
insurance is determined. If the funds are in different types of ownership, or
are deposited into separate banks they would be separately insured.
8. Are
deposits in different banks separately insured?
Yes. If you have
deposits with more than one bank, deposit insurance coverage limit is applied
separately to the deposits in each bank.
9. If
I have my funds on deposit at two different banks, and those two banks are
closed on the same day, are my funds added together, or insured separately?
Your funds from each
bank would be insured separately, regardless of the date of closure.
10. What
is the meaning of deposits held in the same right and capacity and different
right and capacity?
If a person opens in
his name more than one account in a bank, for example Mr. Sinha opens one
savings account and one or more fixed deposit accounts, all the accounts are
considered in the same right and capacity and insurance coverage is limited to
a maximum of Rupees one lakh. But if Mr. Sinha opens a joint account, the joint
account is considered in different right and capacity and insurance coverage is
provided separately from any deposits individually owned by the joint
depositors. Each joint account owned by a combination of different persons is
insured up to Rupees One Lakh.
|
Account Names |
Savings A/c |
Current A/c |
FD A/c |
Total Deposits |
Deposits Insured |
|
Shri S K Pandit (Individual) |
17,200.00 |
22,000.00 |
80,000.00 |
119,200.00 |
100,000.00 |
|
Shri S K Pandit (Partner of ABC & Co) |
|
75,000.00 |
50,000.00 |
125,000.00 |
100,000.00 |
|
Shri S K Pandit (Guardian for Master Ajit) |
7,800.00 |
|
80,000.00 |
87,800.00 |
87,800.00 |
|
Shri S K Pandit (Director, J K Udyog Ltd) |
|
230,000.00 |
45,000.00 |
275,000.00 |
100,000.00 |
Deposits
held in joint accounts
|
Account |
(i) |
First a/c holder - "A" Second a/c holder - "B" |
Maximum Insured amount up to Rs. 1 Lakh |
|
Account |
(ii) |
First a/c holder - "A" Second a/c holder - "C" |
Maximum Insured amount up to Rs. 1 Lakh |
|
Account |
(iii) |
First a/c holder - "B" Second a/c holder - "A" |
The a/c will be clubbed with the a/c at (i) |
|
Account |
(iv) |
First a/c holder - "A" Second a/c holder - "B" Third a/c holder - "C" |
Maximum Insured amount up to Rs. 1 Lakh |
|
Account |
(v) |
First a/c holder - "B" Second a/c holder - "C" Third a/c holder - "A" |
The a/c will be clubbed with the a/c at (iv) |
11. Can
the bank deduct the amount of dues payable by the depositor?
Yes. Banks have right
to set off their dues from the amount of deposits. The deposit insurance is
available after netting of such dues.
12. Who
pays the cost of deposit insurance?
Deposit insurance premium is borne by
the insured banks.
13. When
is DICGC liable to pay?
If a bank goes into liquidation:
DICGC is liable to pay
to each depositor through the liquidator, the amount of his deposit up to
Rupees One Lakh within two months from the date of receipt of claim list from
the liquidator.
If a bank is reconstructed or
amalgamated/merged with another bank:
DICGC pays the bank
concerned, the difference between the amount due to depositor under the
insurance scheme and the amount received by him under the
reconstruction/amalgamation scheme within two months from the date of receipt
of claim list from the transferee bank/Chief Executive Officer of the insured
bank as the case may be.
14. Does
the DICGC directly deal with the depositors of failed banks?
No. In the event of a
bank’s liquidation, the liquidator prepares depositor wise claim list and sends
it to the DICGC for the scrutiny and payment. DICGC pays the money to
liquidator who is liable to pay to the depositors. In the case of
amalgamation/merger of banks, the amount due to each depositor is paid to the
transferee bank.
15. Can
any insured bank withdraw from the DICGC coverage?
No. The deposit
insurance scheme is compulsory and no bank can withdraw from it.
16. Can
DICGC withdraw deposit insurance coverage from any bank?
Deposit Insurance
coverage of a bank may be withdrawn if it has been prohibited from receiving
fresh deposits; or its license has been cancelled by the Reserve Bank; or it
has been ordered to be would up; or it has transferred all deposit liabilities
in India to any other institution; or it ceases to be a banking
company/eligible co-operative bank; or a liquidator has been appointed in
pursuance of a resolution for voluntary winding up of its affairs; or a scheme of
compromise or arrangement or reconstruction has been sanctioned by any
competent authority and the said scheme does not permit acceptance of fresh
deposit; or it has been amalgamated with any other bank/co-operative society.
The Corporation may
cancel the registration of an insured bank if it fails to pay the premium for
three consecutive periods. In the event of DICGC withdrawing its coverage from
any bank for default in the payment of premium the public will be notified
through newspapers.
The depositors will
continue to have the benefit of Deposits Insurance on the amount of deposit
held by them as on the date of withdrawal of coverage.
End of the document……