Why in News?
Recently, the failure of the Punjab and Maharashtra Co-operative (PMC) Bank reignited the debate on the low level of insurance against the deposits held by customers in Indian banks
- Currently, in case of a bank collapse, a depositor can claim an amount up to a maximum of ₹ 5 lakh(earlier 1 lakh) per account as the insurance cover (even if the deposit in their account is greater than ₹ 5 lakh).
- This amount is termed ‘deposit insurance’– the insurance cover against the deposits of an individual in banks.
- Banks that come under DICGC scheme- all Commercial Banks + RRBs + cooperative banks (except rural Primary cooperative societies and At present all co-operative banks of Meghalaya, and the Union Territories of Chandigarh, Lakshadweep and Dadra and Nagar Haveli)
- The insurance cover is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
- Deposit Insurance and Credit Guarantee Corporation
- DICGC came into existence in 1978 with the Deposit Insurance and Credit Guarantee Corporation Act, 1961 by the Parliament.
- It serves as a deposit insurance and credit guarantee for banks in India.
- It is a fully owned subsidiary of and is governed by the Reserve Bank of India.
- DICGC charges 12 paise per ₹ 100 of deposits held by a bank. This premium is paid by the banks and is not to be passed on to depositors.