New Delhi: Nowadays, the stories of banks sinking into crisis are not very rare. In a situation like this, people who deposit money in the bank are worried about what would happen to the deposit. To alleviate the concerns of depositors, the bank deposits are insured by the government corporation, namely, Deposit Insurance Credit Guarantee Corporation (DICGC), a wholly owned subsidiary of the Reserve Bank of India.
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According to a Business Standard report, the deposit limit is expected to change in the next 6 months. There are indications from the Finance Ministry that the limit is to be increased from Rs 5 lakh to Rs 10 lakh. Yet, no official announcement has been made on the ministry’s part. According to experts, the idea of increasing the limit came after the recent case of the New India Cooperative Bank crisis. The current limit of Rs 5 lakh was fixed in 2020 when the crisis of Punjab and Maharashtra Cooperative Bank (PMC) unfolded and thereby affected a lot of depositors.
DICGC Statistics
According to the Deposit Insurance and Credit Guarantee Corporation (DICGC), out of 2.89 billion accounts as of March 31, 2024, approximately 98% of the accounts are fully protected under insurance up to Rs 5 lakh. Yet, the insurance covers only 43.1% of the amount. According to the data of the central bank, DICGC has settled claims worth Rs 1,432 crore in the financial year 2023-24. The special thing is that all this amount was related to cooperative banks. By the end of the previous financial year, 1,997 insured banks were registered with DICGC. In which there were 140 commercial and 1,857 cooperative banks. There was an income of Rs 23,879 crore from insurance premiums last fiscal year.
Deposit Insurance and Credit Guarantee Corporation
DICGC aims for the financial safety net in India. The DICGC protects small depositors against the risk of loss arising out of bank failures or banks going bankrupt. The body was established in 1978. At the time ,the insurance body limit was Rs 1,500. In the year 1976, this limit was increased to Rs 20,000. In 1980, it was increased to Rs 30,000, and in 1993, it was increased to Rs 1 lakh.
Concerns about bank failures have heightened interest in India’s deposit insurance system. The Deposit Insurance and Credit Guarantee Corporation (DICGC) insures deposits up to Rs 5 lakh per depositor per bank. Recent news suggests a potential increase to Rs 10 lakh, driven by recent banking crises. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
