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Deposit Insurance and Credit Guarantee Corporation Act 1961

The document discusses the Deposit Insurance and Credit Guarantee Corporation (DICGC) in India. It states that DICGC was formed in 1978 by merging the Deposit Insurance Corporation and Credit Guarantee Corporation of India to provide deposit insurance against bank failures. DICGC insures all commercial and cooperative banks in India, protecting bank deposits including savings, fixed, and recurring accounts, except for certain exempted deposits. DICGC collects premiums from insured banks and settles claims in the event of a bank's winding up or liquidation to maintain stability and public confidence in India's banking system.

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Debayan Ghosh
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2K views10 pages

Deposit Insurance and Credit Guarantee Corporation Act 1961

The document discusses the Deposit Insurance and Credit Guarantee Corporation (DICGC) in India. It states that DICGC was formed in 1978 by merging the Deposit Insurance Corporation and Credit Guarantee Corporation of India to provide deposit insurance against bank failures. DICGC insures all commercial and cooperative banks in India, protecting bank deposits including savings, fixed, and recurring accounts, except for certain exempted deposits. DICGC collects premiums from insured banks and settles claims in the event of a bank's winding up or liquidation to maintain stability and public confidence in India's banking system.

Uploaded by

Debayan Ghosh
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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DEPOSIT INSURANCE AND CREDIT

GUARANTEE CORPORATION
Deposit Insurance and Credit Guarantee Corporation Act 1961
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
Concept of Deposit Insurance

Explicit deposit insurance is a measure implemented in


many countries to protect bank depositors, in full or in
part, from losses caused by a bank's inability to pay its
debts when due. Deposit insurance systems is a
component of a financial system safety net that
promotes financial stability
Formation of DICGC

 Concept of insuring the deposits came after the banking


crisis in 1948
 The Deposit Insurance Corporation(DIC) bill was
introduced in Parliament in 1961.
 Deposit insurance act 1961, came into force on 1st
January 1962.
 In 1971, RBI also promoted a public limited company
Credit Guarantee Corporation of India Ltd.(CGCI).
 To integrate the function of DIC and CGCI, the two were
merged and formed DICGC in 1978.
DICGC insures…

 In the event of a bank failure, DICGC protects bank deposits that


are payable in India.
The DICGC insures all deposits such as savings, 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 bank;
(v) Any amount due on account of any deposit received outside
India
(vi) Any amount, which has been specifically exempted by the
corporation with the previous approval of Reserve Bank of India
Banks insured under DICGC

1. 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
2. Cooperative Banks: All State, Central and Primary
cooperative banks, also called urban cooperative
banks
3. Primary cooperative societies are not insured by the
DICGC
Role and Function of the Deposit
Insurance System
 Deposit Insurance plays a key role in maintenance of
financial stability by sustaining public confidence in the
banking system in India through protection of depositors,
especially small and less sophisticated depositors, against
loss of deposit to a significant extent.
 The deposit insurance system in India is subject to the
Provisions of Deposit Insurance Act (enacted in1961).
 Deposit Insurance and Credit Guarantee Corporation
(DICGC), which was established with funding from the
Reserve Bank of India is the body that operates the deposit
insurance system.
WORKING PROCESS

 Institutional coverage
- all commercial banks
- all eligible cooperative banks u/s 2(gg)
of DICGC
 Registration of Banks
- all regional banks u/s 11 of
DICGC Act 1961
- all eligible cooperative banks
- Own fund
 Insurance Coverage
Types of Deposit Covers
- The Corporation insures all bank
deposits , such as savings, fixed, current,
recurring, etc. except the deposits of (i) foreign
Governments; (ii) Central/ State Governments;
(iii)State Land development Banks
with the State co- operative banks; as also (iv) inter-
bank deposits (v) deposits received outside
India and (vi) deposit specifically exempted by the
Corporation with the previous approval of the
Reserve Bank.
 Insurance premium
 The corporation collects premium from the insured banks

 Cancellation of Registration
- U/S 15A of DICGC Act the corp. possess the power to cancel the
registration of insured banks if it fails to pay premium for 3 consecutive
half year period
 Supervision and inspection of insured banks

 Settlement of claims:
- It helps to settle claims in the event of winding up or
liquidation of an insured banks
Thank You

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