What is Deposit insurance? It is a measure of protection to depositors, particularly small depositors, from the risk of loss of their savings arising from bank failures. Who implements the Deposit insurance in India? Deposit Insurance and Credit Guarantee Corporation (DICGC) is a wholly owned subsidiary of the Reserve Bank of India. The Corporation was established for the purpose of insurance of deposits and guaranteeing of credit facilities and is governed by the provisions of 'The Deposit Insurance and Credit Guarantee Corporation Act, 1961' (DICGC Act) and 'The Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961' framed by the Reserve Bank of India. Deposit insurance remains the principal function of the Corporation. DICGC is a member of International Association of Deposit Insurers (IADI). When is DICGC liable to pay? If a bank goes into liquidation, DICGC is liable to pay to the liquidator the claim amount of each depositor up to Rupees five lakhs within two months from the date of receipt of claim list from the liquidator. The liquidator has to disburse the claim amount to each insured depositor corresponding to their claim amount. If a bank is reconstructed or amalgamated / merged with another bank: The DICGC pays the bank concerned, the difference between the full amount of deposit or the limit of insurance cover in force at the time, whichever is less 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/transferee bank as the case may be." If a bank is placed under directions by RBI and such directions prevent depositors from accessing their deposits in the bank, then DICGC becomes liable to pay an amount payable under section 16. Which banks are insured by the DICGC? All commercial banks (including branches of foreign banks functioning in India, local area banks and regional rural banks) and all co-operative banks are insured by the DICGC. Primary co-operative societies are not insured by DICGC. The deposit insurance scheme is mandatory, and no bank can withdraw from it. How will you know whether your bank is insured by the DICGC? The list of insured banks is published on the DICGC website. To view the list, click here. What is the maximum deposit amount insured by the DICGC? Presently, each depositor in a bank is insured upto a maximum of 5,00,000/- (Rupees Five Lakhs only) for both principal and interest amount held by him/her in the "same right and same capacity" as on the date of liquidation/cancellation of a bank's licence or the date on which the scheme of amalgamation/merger/reconstruction comes into force or the date of any direction is issued or any prohibition or order or scheme is made under any of the provisions of the Banking Regulation Act, 1949 and such direction, prohibition, order of scheme provides for restrictions on depositors of such bank. The deposits kept in different branches of a bank are aggregated for the purpose of insurance cover and a maximum amount of upto 5,00,000/- (Rupees Five Lakhs only) is paid. What does the DICGC insure? The DICGC insures all deposits such as savings, fixed, current, recurring, etc. deposits except the following types of deposits : Deposits of foreign Governments Deposits of Central/State Governments Inter-bank deposits 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 What’s Not covered? Deposits mobilized by Non-Banking Financial Company (NBFC) Deposits mobilized by Land Development Banks Mutual funds Stocks and bonds Exchange Traded Funds (ETFs) Cryptocurrencies 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. Who pays the cost of deposit insurance? Deposit insurance premium is borne entirely by the insured bank, and it cannot be passed on to the depositors. What will be the Corporation's liability to the banks placed under All-Inclusive Directions? The Corporation is liable to settle deposit insurance claims of insured banks placed under All-Inclusive Directions (AID) within 90 days, subject to submission of a list showing outstanding deposits of each depositor by the insured bank within the statutory timeline of 45 days of imposition of AID by RBI. (In terms of Section 18A (with effect from September 01, 2021) read with Section 16 of the DICGC Act, 1961) What are depositors required to do when a bank is placed under AID? Depositors are required to approach the CEO / administrator of such bank, as the case may be, and furnish the duly signed willingness form (available with the bank) accompanied by duly attested copies of officially valid documents (OVDs) ascertaining the identity of the depositor. Source : Deposit Insurance and Credit Guarantee Corporation