DICGC Act: Here’s What FD Investors Need To Know After Recent Changes Made By FM

The Union Cabinet ratified a modification to the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act on Wednesday, allowing bank customers to recover up to Rs 5 lakh deposits within 90 days of a bank being placed under moratorium. The Act is anticipated to be tabled during the current monsoon period, according to the Finance Minister (FM) Nirmala Sitharaman. The proposal, according to the FM, will apply to all sorts of banks, including regional rural banks and co-operative banks, and will allow to small depositors who park their money in lenders such as PMC Bank and other small cooperative banks that are subject to a moratorium to enjoy the insurance coverage benefits provided by DICGC which is nothing but a subsidiary of RBI. In the press meeting held yesterday, Union Minister Anurag Thakur said that "Deposit Insurance Credit Guarantee Corporation was created in case people faced difficulties after RBI imposes moratoriums on banks. Today's Cabinet meeting has decided that within 90 days, depositors will receive Rs 5 lakhs of their money."

Key details of amendment in DICGC Act

• The Union Cabinet has agreed that fixed deposit investors can claim or recover the money deposited within 90 days once a responsible bank goes under a moratorium.
• The initial 45 days will be set aside for banks in bankruptcy to be handed over to the Deposit Insurance and Credit Guarantee Corporation. FM stated that the procedure will be finished without having to wait for a settlement within 90 days.
• All commercial banks in India, including subsidiaries of overseas banks operating in India, would be subject to this law, which will also apply to institutions that are now subject to a moratorium.
• Sitharaman further stated that the DICGC Act will insure 98.3 percent of all bank accounts, with above 50 percent coverage in respect of deposit amount.
• She further added that "Each depositor's deposit in a bank is insured up to a maximum of Rs 5 lakh, for both principal and interest. Now in India, with an increase in insurance amount from Rs 1 lakh to Rs 5 lakh, this insurance is going to cover 98.3% of all deposit accounts. This clearance now, therefore, is going to give relief to all those institutions which have already come under moratorium. It is not going retrospectively back, but if your bank has already been declared under moratorium, this will cover."

Which deposits are covered under DICGC?

Except for the deposits listed below, the DICGC protects all deposits, including savings, fixed, current, and recurring deposits.

• Deposits of foreign Governments;
• Deposits of Central/State Governments;
• Inter-bank deposits;
• Deposits of the State Land Development Banks with the State co-operative bank;
• Any amount due on account of and deposit received outside India
• Any amount, which has been specifically exempted by the corporation with the previous approval of the Reserve Bank of India.

How does DICGC insurance cover works?

By citing an example on its official website, DICGC has stated that "The DICGC insures principal and interest upto a maximum amount of five lakhs. For example, if an individual had an account with a principal amount of 4,95,000 plus accrued interest of 4,000, the total amount insured by the DICGC would be 4,99,000. If, however, the principal amount in that account was five lakhs, the accrued interest would not be insured, not because it was interest but because that was the amount over the insurance limit." Before deposit insurance is computed, all deposits held in the same kind of possession at the same bank are summed together. According to the DICGC Act, if the funds are under various forms of possession or are placed in different banks, they will be individually insured.

List of banks insured by the DICGC

Except for primary cooperative societies, the following banks are DICGC-insured.

Sr No.	Categories
1	Public Sector Banks
2	Private Sector Banks
3	Foreign Banks
4	Small Finance Banks
5	Payment Banks
6	Regional Rural Banks
7	Local Area Banks
8	State Co-operative banks
9	District Central Co-op banks
10	Urban Co-op banks
Source: DICGC

For more information, you can visit https://www.dicgc.org.in/FD_ListOfInsuredBanks.html