Deposit insurance is there to cover a customer’s deposits in a bank. This insurance is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC). DIGC includes various small finance banks as well as commercial public banks.
Deposit Insurance and Credit Guarantee Corporation, also known as DICGC is Reserve Bank of India’s wholly-owned subsidiary. This corporation was established with the goal of providing deposit insurance as well as to strengthen the credit facilities in India.
DICGC provides insurance for commercial banks like HDFC or SBI as well as for small finance banks like Suryodaya and Fincare. The corporation provides insurance of up to Rs.5 lakh (principal plus interest) for deposits.
DICGC insurance covers deposits in:
However, the corporation doesn’t insure deposits like:
When an insured bank goes bankrupt, the DICGC is held liable. The claim list is provided by the bank to the DICGC. The DICGC pays the total insurance payment to the liquidator within two months of receiving the claim list. Following that, it is the bank's job to disperse the money proportionately to each insured depositor.
No, the DICGC only insures bank’s deposits. It does not apply to non-banking financial companies (NBFCs).
All of your bank deposits are insured up to Rs.5 lakh. Similarly, if you invest in another bank at the same time, that sum will be covered separately.
No, you are not required to pay for deposit insurance. The insured bank is fully responsible for deposit insurance cost.
No, it is not possible for your bank to opt out of the DIGC’s coverage. As the coverage is a requirement, no bank can withdraw from it.
Yes, both the principal and the interest are covered by DICGC. The combined principal and interest cannot, however, exceed Rs.5 lakh. The interest on the principal will not be covered if the principal itself is Rs.5 lakh.
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