Deposit Insurance and Credit Guarantee Corporation
Deposit Insurance and Credit Guarantee Corporation ( DICGC) is a subsidiary of Reserve Bank of India. It was established on July 15, 1978 under Deposit Insurance and Credit Guarantee Corporation Act, 1961 for the purpose of providing insurance of deposits and guaranteeing of credit facilities. DICGC insures all bank deposits, such as saving, fixed, current, recurring deposits for up to the limit of Rs. 100,000 of each deposits in a bank.
The functions of the DICGC (deposit insurance and credit guarantee corporation)are 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 in exercise of the powers conferred by sub-section (3) of Section 50 of the said Act.
The preamble of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 states that it is an Act to provide for the establishment of a Corporation for the purpose of insurance of deposits and guaranteeing of credit facilities and for other matters connected therewith or incidental thereto.
Organization and Functions
The authorized capital of the Corporation is 50 crore, which is fully issued and subscribed by the Reserve Bank of India (RBI). The management of the Corporation vests with its Board of Directors, of which a Deputy Governor of the RBI is the Chairman. As per the DICGC Act, the Board shall consist of, besides the Chairman, (i) one Officer (normally in the rank of Executive Director) of the RBI, (ii) one Officer from the Central Government, (iii) five Directors nominated by the Central Government in consultation with the RBI, three of whom are persons having special knowledge of commercial banking, insurance, commerce, industry or finance and two of whom shall be persons having special knowledge of, or experience in co-operative banking or co-operative movement and none of the directors should be an employee of the Central Government, or the RBI or the Corporation or a director or an employee of a banking company or a co-operative bank, or otherwise actively connected with a banking company or a co-operative bank, and (iv) four Directors, nominated by the Central Government in consultation with the RBI, having special knowledge or practical experience in respect of accountancy, agriculture and rural economy, banking, co-operation, economics, finance, law or small scale industry or any other matter which may be considered to be useful to the Corporation.
The Head Office of the Corporation is at Mumbai. An Executive Director is in overall charge of its day-to-day operations. It has four Departments, viz. Accounts, Deposit Insurance, Credit Guarantee and Administration, under the supervision of other Senior Officers. The Corporation had four branches, situated at Kolkata, Chennai, Nagpur and New Delhi. Out of these, the branches situated at Kolkata, Chennai and Nagpur were closed with effect from November 30, 2000, since almost all the banks have opted out of the Credit Guarantee Schemes, and most of the pending claims have been settled. While major items of work of these three branches were taken over by the Head Office of the Corporation, some residual items of work are vested with the DICGC Cells specially created in the Rural Planning & Credit Department of the Reserve Bank of India at the respective centres.
Banks covered by Deposit Insurance Scheme
(I) All commercial banks including the branches of foreign banks functioning in India, Local Area Banks and Regional Rural Banks.
(II) Co-operative Banks - All eligible co-operative banks as defined in Section 2(gg) of the DICGC Act are covered by the Deposit Insurance Scheme. All State, Central and Primary co-operative banks functioning in the States/Union Territories which have amended their Co-operative Societies Act as required under the DICGC Act, 1961, empowering RBI to order the Registrar of Co-operative Societies of the respective States/Union Territories to wind up a co-operative bank or to supersede its committee of management and requiring the Registrar not to take any action for winding up, amalgamation or reconstruction of a co-operative bank without prior sanction in writing from the RBI, are treated as eligible banks. At present all Co-operative banks are covered by the Scheme. The Union Territories of Lakshadweep and Dadra and Nagar Haveli do not have Co-operative Banks.
Registration of new banks as insured banksz
Under Section 11 of the DICGC Act, 1961, all new commercial banks are required to be registered as soon as may be after they are granted licence by the Reserve Bank of India under Section 22 of the Banking Regulation Act, 1949.
Following the enactment of the Regional Rural Banks Act, 1976 all Regional Rural Banks are required to be registered within 30 days from the date of their establishment in terms of Section 11A of the DICGC Act, 1961.
Co-operative Banks - A new co-operative bank is required to be registered as soon as may be after it is granted a licence by the RBI.
A primary co-operative credit society becoming a primary co-operative bank is to be registered within 3 months from the date of its application for licence.
A co-operative bank which has come into existence after the commencement of the Deposit Insurance Corporation (Amendment) Act, 1968, as a result of the division of any other co-operative society carrying on business as a co-operative bank, or the amalgamation of two or more co-operative societies carrying on banking business at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 or at any time thereafter is to be registered within three months of its making an application for licence.
However, a co-operative bank will not be registered, if it has been informed by the RBI in writing that a licence cannot be granted to it.
In terms of Section 14 of the DICGC Act, after the Corporation registers a bank as an insured bank, it is required to send, within 30 days of the bank's registration, an intimation in writing to the bank that it has been registered as an insured bank.
The letter of intimation, apart from the advice of registration and registration number, gives the details about the requirements to be observed by the bank, the rate of premium payable to the Corporation, the manner in which the premium is to be paid by the bank and the returns to be furnished to the Corporation etc. The insured bank has to submit its first return and remit the amount of premium within one month from the receipt of the letter, which is dispatched by Registered post or the date of commencement of business whichever is later. A copy of this letter is endorsed to the Reserve Bank of India and also National Bank For Agriculture and Rural Development (NABARD) in the case of Regional Rural Banks/State co-operative banks and District Central co-operative banks.
IInitially, under the provisions of Section 16(1) of the DICGC Act, the insurance cover was limited to 1,500/- only per depositor(s) for deposits held by him (them) in the "same right and in the same capacity" in all the branches of the bank taken together. However, the Act also empowers the Corporation to raise this limit with the prior approval of the Central Government. Accordingly, the insurance limit was enhanced from time to time as follows:
5,000/- with effect from 1 January 1968 10,000/- with effect from 1 April 1970 20,000/- with effect from 1 January 1976 30,000/- with effect from 1 July 1980 1,00,000/- with effect from 1 May 1993 onwards.
1,00,000/- with effects from 1 june 1991.
Types of Deposits Covered DICGC insures all bank deposits, such as saving, fixed, current, recurring, etc. except the following types of deposits.
(i) Deposits of foreign Governments; (ii) Deposits of Central/State Governments; (iii) Inter-bank deposits; (iv) Deposits of the State Land Development Banks with the State co-operative banks; (v) Any amount due on account of and deposit received outside India; (vi) Any amount which has been specifically exempted by the corporation with the previous approval of the RBI.
The rate of insurance premium was initially fixed at .0.05 or 1/20th of 1 per cent per annum. It was reduced to .0.04 or 1/25th of 1 per cent per annum with effect from 1 October 1971. However, it was again raised to .0.05 or 1/20th of 1 per cent per annum with effect from 1 July 1993.Since 2001,the Corporation has had to settle claims for large amounts due to the failure of banks, particularly in the Co-operative Sector causing a drain on the Deposit Insurance Fund (DIF). While there is sufficient corpus in Deposit Insurance Fund for the present, it is necessary to build up a sound DIF in the long term to protect the interests of the banking system. With this objective the Corporation decided to enhance the deposit insurance premium from 5 paise per 100 of assessable deposits per annum to 10 paise per 100 of assessable deposits per annum in a phased manner over a period of two years. In the first phase, the premium was raised to 8 paise per 100 of assessable deposits from the financial year 2004-05 and later to 10 paise per 100 assessable deposits from the financial year 2005-06. The Corporation will continuously review the DIF and will consider revising the premium further from time to time with the objective of maintaining a strong DIF.For further details refer the section - What's New
The premium paid by the insured banks to the Corporation is required to be absorbed by the banks themselves so that the benefit of deposit insurance protection is made available to the depositors free of cost. In other words the financial burden on account of payment of premium should be borne by the banks themselves and should not be passed on to the depositors. The formula for working out the half-yearly premium is as follows: -
Deposits in rupees rounded to thousands X 0.05 / 100
The deposits should be rounded off to the nearest thousand Rupees
An insured bank is required to remit premium not later than the last day of May and November each year. If it does not pay on or before the stipulated date the premium payable by it or any portion thereof, it is liable to pay interest at the rate of 8% above the Bank Rate on the amount of such premium or on the unpaid portion thereof, as the case may be, from the beginning of the half-year till the date of payment. Interest is calculated on this basis for the actual number of days of default, taking 1 year as 365 days.
Any amount payable to the Corporation by way of premium or interest on the overdue amount of premium can be paid in the following manner: (i) Directly for credit of Deposit Insurance Fund A/C of the Corporation maintained with RBI, Deposit Accounts Department, Mumbai. (ii) Remittance by crossed cheque, demand draft or T.T. drawn and payable at Mumbai, in favour of the Corporation.
Cancellation of Registration
Under Section 15A of the DICGC Act, the Corporation has the power to cancel the registration of an insured bank if it fails to pay the premium for three consecutive half-year periods. However, the Corporation may restore the registration of the bank, which has been de-registered for non-payment of premium, if the concerned bank makes a request in this behalf and pays all the amounts due by way of premium from the date of default together with interest. Registration of an insured bank stands cancelled if the bank is prohibited from receiving fresh deposits; or its licence is cancelled or a licence is refused to it by the RBI; or it is wound up either voluntarily or compulsorily; or it ceases to be a banking company or a co-operative bank within the meaning of Section 36A(2) of the Banking Regulation Act, 1949; or it has transferred all its deposit liabilities to any other institution; or it is amalgamated with any other bank or a scheme of compromise or arrangement or of reconstruction has been sanctioned by a competent authority and the said scheme does not permit acceptance of fresh deposits. In the case of a co-operative bank, its registration also gets cancelled if it ceases to be an eligible co-operative bank. In the event of the cancellation of registration of a bank, deposits of the bank remain covered by the insurance till the date of the cancellation.
Every insured bank is required to furnish to the Corporation as soon as possible, after the commencement of each calendar half-year, but not in any event later than the last day of the first month of the half-year, a statement (Form DI Return) in duplicate, showing the basis on which the premium payable by that bank has been calculated and the amount of premium payable by that bank for that half-year. The statement should be certified as correct by two officials authorised by the bank for this purpose and it has to furnish to the Corporation specimen signatures of the officers authorised to sign the statements and returns under the DICGC Act, 1961.
The liquidator of a bank which has been wound up or liquidated and the chief executive officer of the transferee bank or the insured bank as the case may be in the case of amalgamation or reconstruction etc. sanctioned by a competent authority, is required to submit quarterly statements in the prescribed formats to the DICGC indicating the particulars of utilization of the amounts released by the DICGC, the position of realisation of assets of the bank and utilization of the amounts thereof and the assets and liabilities of the bank.
Supervision and Inspection of Insured Banks
The Corporation is empowered (vide Section 35 of the DICGC Act) to have free access to the records of an insured bank and to call for copies of such records. On Corporation's request, the RBI is required to undertake / cause the inspection / investigation of an insured bank.
Settlement of claims
In the event of the winding up or liquidation of an insured bank, every depositor of the bank is entitled to payment of an amount equal to his deposits held by him in the same right and in the same capacity in all the branches of that bank put together, standing as on the date of cancellation of registration (i.e. the date of cancellation of licence or order for winding up or for liquidation) subject to the set off of his dues to the bank, if any (Section 16(1) and (3) of the DICGC Act). However, the payment to each depositor is subject to the limit of the insurance coverage fixed from time to time.
When a scheme of compromise or arrangement or re-construction or amalgamation is sanctioned for a bank by a competent authority, and the scheme does not entitle the depositors to get credit for the full amount of the deposit on the date on which the scheme comes into force, the Corporation pays 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 actually received by him under the scheme. In these cases also the amount payable to a depositor is determined in respect of all his deposits held in the same right and in the same capacity in all the branches of that bank put together subject to the set off of his dues to the bank, if any (Section 16(2) and (3) of the DICGC Act).
Under the provisions of Section 17(1) of the DICGC Act, the liquidator of an insured bank which has been wound up or taken into liquidation has to submit to the DICGC a list showing separately the amount of the deposit in respect of each depositor and the amount set off, in such a manner as may be specified by the DICGC and certified to be correct by the liquidator, within three months from the date of his assuming charge of office. In the case of a bank for which a scheme of amalgamation/ reconstruction, etc. has been sanctioned, similar list has to be submitted by the chief executive officer of the concerned transferee bank or insured bank as the case may be, within three months from the date on which the scheme of amalgamation/reconstruction, etc. comes into effect (Section 18(1) of the DICGC Act).
The DICGC is required to pay the amount payable under the provisions of the Act in respect of the deposits of each depositor within two months from the date of receipt of such lists. The time-limit is, however, subject to all the information/documents as required by the Corporation being in order.
On the receipt of an order for the liquidation of a bank or a scheme of amalgamation/reconstruction etc. for a bank approved by a competent authority, the Corporation sends detailed guidelines for compilation of the claim list to the liquidator/chief executive officer of the transferee or insured bank, as the case may be. Besides, copies of the audited balance sheet and the profit and loss accounts of the bank as on the date of cancellation of registration i.e. the date of cancellation of licence /liquidation/amalgamation /reconstruction etc. of the bank are called for, to verify the authenticity of the total deposits as given in the claim list. A check list relating to the discrepancies commonly observed in the course of scrutiny of the claim lists is given in the Annexure.
The DICGC makes the payment of the eligible amount to the liquidator/chief executive officer of the transferee / insured bank, for disbursement to the depositors. No payment is made directly to the depositors. However, the amounts payable to the untraceable depositors i.e. those in respect of whom necessary information is not available, are held back till the liquidator/chief executive officer is in a position to furnish all the requisite particulars.
In terms of Section 21(2) of the DICGC Act read with Regulation 22 of the DICGC General Regulations, the liquidator or the insured bank or the transferee bank as the case may be, is required to repay the amount to the DICGC within such a time and in such a manner as may be prescribed, out of the amounts realised from the assets of the failed bank and other amounts in hand after making provision for the expenses incurred, as soon as such amounts are sufficient to pay to each depositor one paisa or more in the Rupee.
The Corporation maintains the following Funds: Deposit Insurance Fund Credit Guarantee Fund General Fund
The first two are funded respectively by the insurance premia and guarantee fees received and are utilised for settlement of the respective claims. The General Fund is utilised for meeting the establishment and administrative expenses of the Corporation.
The surplus balances in all the three Funds are invested in Central Government securities which is the only investment permissible under the Deposit Insurance and Credit Guarantee Corporation Act, 1961 and the income derived out of such investments is credited to the respective Funds. Inter-Fund transfer is permissible and if there is a shortfall in one of the Funds, it is made good by transfer from either of the other two Funds.
The Corporation has adopted from 1987, the system of actuarial valuation of the liabilities of Deposit Insurance and Credit Guarantee Funds every year. The Corporation has become assessable for income tax starting from the Assessment Year 1988-89.
The books of accounts of the Corporation are closed as on 31 March every year. The affairs of the Corporation are audited by an Auditor appointed by the Board of Directors with the previous approval of RBI. The audited accounts together with Auditor's report and a report on the working of the Corporation are required to be submitted to RBI within 3 months from the closing of accounts. Copies of these documents are also submitted to the Central Government, which are laid before each House of the Parliament.
The Administration Department of DICGC attends to all staff and establishment related functions in respect of the employees of the Corporation who all are the employees of RBI. DICGC is treated as an independent salary drawing unit.
The Board Section attends to all matters relating to arranging for the Board Meetings, preparation of the agenda notes and minutes of the Board Meetings and monitoring compliance of the decisions taken in these meetings.
Preservation period of Records
1. Which banks are insured by the DICGC? (THIS IS THE BIG QUESTION, AS EVERY YEAR MORE THEN DOZEN BANKS GO FOR CLOSURE just because INDIAN LEGISLATURE not implementing strict laws, and it's hard to believe if it's not coming in their notice from 14+ years.
DICGC claim that investment up to 100000 are insured but in REALITY its all humbug, as claims are not settled from last 14 years... and DICGC is simply throwing send in Indian people.
Hapless-depositors-of-urban-co-operative-banks... easy implementation are mentioned here (http://www.moneylife.in/article/hapless-depositors-of-urban-co-operative-banks/35086/57414.html)
What needs to be done to protect the hapless depositors of these banks?
First, and foremost, there is an urgent need to force the liquidators to do their primary job of submitting the claim to DICGC, get the amount due and disburse the same to the depositors of failed banks without any further delay. If the liquidators are not amenable to the directions they should be replaced without any fear or favour and steps should be taken to appoint liquidators who comply with the orders of the authorities concerned. The DICGC should not only pay the amount of insured deposits against such a claim, but also pay interest at the bank rate on these deposits over and above the insured deposit amount, as the delay is only due to the failure of the government appointed liquidators. Besides, DICGC as the protector of bank depositors should amend their rules and accept claims from the depositors directly, if the liquidators do not do their job within a reasonable time.
DICGC should be empowered to not only take stern action against the defaulting banks but also be authorized to step in to the shoes of the liquidators who fail to deliver to protect the interest of depositors of failed banks.
RBI should take immediate steps to put an end to the dual control of these banks even by getting the required laws amended and have complete control over these banks to ensure that they are run on sound lines and failure of these banks should be considerably minimized if not totally avoided.
In the context of many co-operative banks falling like of pack cards causing irreparable damage to the banking system and unbearable loss to the poor depositors, who have no voice in the present scheme of things, RBI should first put the house of co-operative banks in order before venturing into granting new banking licenses. The low level of deposit insurance cover existing at present in respect of the weak and shaky co-operative banks is nothing but a mockery of the banking system that calls for total overhaul in the interest of retaining public confidence in the banking system in our country.
RBI should give utmost priority to protect the hapless depositors and work out a new banking order that is 100% safe and secure to protect the poor, illiterate and less fortunate people of our country, who are now virtually pushed in to the banking system in the name of financial inclusion without ensuring safety of their hard earned savings.)
Commercial Banks: All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are insured by the DICGC.
Cooperative Banks: All State, Central and Primary cooperative banks, also called urban cooperative banks, functioning in States / Union Territories which have amended the local Cooperative Societies Act empowering the Reserve Bank of India (RBI) to order the Registrar of Cooperative Societies of the State / Union Territory to wind up a cooperative bank or to supersede its committee of management and requiring the Registrar not to take any action regarding winding up, amalgamation or reconstruction of a co-operative bank without prior sanction in writing from the RBI are covered under the Deposit Insurance Scheme. At present all co-operative banks other than those from the State of Meghalaya and the Union Territories of Chandigarh, Lakshadweep and Dadra and Nagar Haveli are covered by the DICGC.
Primary cooperative societies are not insured by the DICGC.
2. What does the DICGC insure?
The 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 Central/State Governments;
(iii) Inter-bank deposits;
(iv) Deposits of the State Land Development Banks with the State co-operative bank;
(v) Any amount due on account of and deposit received outside India
(vi) Any amount, which has been specifically exempted by the corporation with the previous approval of Reserve Bank of India
3. What is the maximum deposit amount insured by the DICGC?
Each depositor in a bank is insured up to a maximum of 1,00,000 (Rupees One Lakh) for both principal and interest amount held by him in the same right and same capacity as on the date of liquidation/cancellation of bank's licence or the date on which the scheme of amalgamation/merger/reconstruction comes into force.
4. How will you know whether your bank is insured by the DICGC or not?
The DICGC while registering the banks as insured banks furnishes them with printed leaflets for display giving information relating to the protection afforded by the Corporation to the depositors of the insured banks. 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 one lakh is paid.
6. Does the DICGC insure just the principal on an account or both principal and accrued interest?
The DICGC insures principal and interest up to a maximum amount of One lakh. For example, if an individual had an account with a principal amount of 95,000 plus accrued interest of 4,000, the total amount insured by the DICGC would be 99,000. If, however, the principal amount in that account was 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?
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 then 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 capacity and same right; and deposits held in different capacity and different right?
If an individual opens more than one deposit account in one or more branches of a bank for example, Shri S.K. Pandit opens one or more savings/current account and one or more fixed/recurring deposit accounts etc., all these are considered as accounts held in the same capacity and in the same right. Therefore, the balances in all these accounts are aggregated and insurance cover is available up to rupees one lakh in maximum.
If Shri S.K. Pandit also opens other deposit accounts in his capacity as a partner of a firm or guardian of a minor or director of a company or trustee of a trust or a joint account, say with his wife Smt. K. A. Pandit, in one or more branches of the bank then such accounts are considered as held in different capacity and different right. Accordingly, such deposits accounts will also enjoy the insurance cover up to rupees one lakh separately.
It is further clarified that the deposit held in the name of the proprietary concern where a depositor is the sole proprietor and the amount of Deposit held in his individual capacity are aggregated and insurance cover is available up to rupees one lakh in maximum.
Deposits Insured up to
Shri S. K. Pandit (Individual)
Shri S. K. Pandit (Partner of ABC & Co.)
Shri S. K. Pandit (Guardian for Master Ajit)
Shri S. K. Pandit (Director, J.K. Udyog Ltd.)
Shri S. K. Pandit jointly with Smt. K. A. Pandit
Deposits held in joint accounts (revised w.e.f. April 26, 2007)
If more than one deposit accounts (Savings, Current, Recurring or Fixed deposit) are jointly held by individuals in one or more branch of a bank say three individuals A, B & C hold more than one joint deposit accounts in which their names appear in the same order then all these accounts are considered as held in the same capacity and in the same right. Accordingly, balances held in all these accounts will be aggregated for the purpose of determining the insured amount within the limit of 1 lakh.
However, if individuals open more than one joint accounts in which their names are not in the same order for example, A, B and C; C, B and A; C, A and B; A, C and B; or group of persons are different say A, B and C and A, B and D etc. then, the deposits held in these joint accounts are considered as held in the different capacity and different right. Accordingly, insurance cover will be available separately up to rupees one lakh to every such joint account where the names appearing in different order or names are different.
Account (i) (Savings or CurrentA/C)
First a/c holder- "A" Second a/c holder - "B"
Maximum insured amount up to 1 lakh
First a/c holder - "A" Second a/c holder - "C"
Maximum insured amount up to 1 lakh
First a/c holder - "B" Second a/c holder - "A"
Maximum insured amount up to 1 lakh
Account (iv) at Branch ‘X’ of the bank
First a/c holder - "A" Second a/c holder - "B" Third a/c holder - "C"
Maximum insured amount up to 1 lakh
First a/c holder - "B" Second a/c holder - "C" Third a/c holder - "A"
Maximum insured amount up to 1 lakh
Account (vi) (Recurring or Fixed Deposit)
First a/c holder - "A" Second a/c holder - "B"
The account will be clubbed with the a/c at (i)
Account (vii) At Branch ‘Y’ of the bank
First a/c holder - "A" Second a/c holder - "B" Third a/c holder - "C"
The account will be clubbed with the a/c at (iv)
First a/c holder - "A" Second a/c holder - "B" Third a/c holder - "D"
Maximum insured amount up to 1 lakh
11. Can the bank deduct the amount of dues payable by the depositor?
Yes. Banks have the 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 deposits insurance?
Deposit insurance premium is borne entirely by the insured bank.
13. When is the DICGC liable to pay?
If a bank goes into liquidation:The 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: 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.
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 scrutiny and payment. The DICGC pays the money to the 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 the DICGC withdraw deposit insurance coverage from any bank?
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 the DICGC withdrawing its coverage from any bank for default in the payment of premium the public will be notified through newspapers. Registration of an insured bank stands cancelled if the bank is prohibited from receiving fresh deposits; or its licence is cancelled or a licence is refused to it by the RBI; or it is wound up either voluntarily or compulsorily; or it ceases to be a banking company or a co-operative bank within the meaning of Section 36A(2) of the Banking Regulation Act, 1949; or it has transferred all its deposit liabilities to any other institution; or it is amalgamated with any other bank or a scheme of compromise or arrangement or of reconstruction has been sanctioned by a competent authority and the said scheme does not permit acceptance of fresh deposits. In the event of the cancellation of registration of a bank, deposits of the bank remain covered by the insurance till the date of the cancellation.
17. What will be the Corporation’s liability to the banks on de-registration.
The Corporation has deposit insurance liability on liquidation etc. of "Insured banks" i.e. banks which have been de-registered (a) on account of prohibition on receiving fresh deposits or (b) on cancellation of license or it is found that license can not be granted. The liability of the Corporation in these cases is limited to the extent of deposits as on the date of cancellation of registration of bank as an insured bank.
On liquidation etc. of other de-registered banks i.e. banks which have been de-registered on other grounds such as non payment of premium or their ceasing to be eligible co-operative banks under section 2(gg) of the DICGC Act, 1961, the Corporation will have no liability.
Notice: Information given above is to convey the basic provisions of the deposit insurance scheme of the Corporation. The information is of a non-technical nature and is not intended to be a legal interpretation of the deposit insurance scheme.
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