Deposit Insurance
Banks covered by Deposit Insurance Scheme
(I) All commercial banks including the branches of foreign banks
functioning in India, Local Area Banks and Regional Rural Banks.
(II) Co-operative Banks - All eligible co-operative banks as defined
in Section 2(gg) of the DICGC Act are covered by the Deposit
Insurance Scheme. All State, Central and Primary co-operative banks
functioning in the States/Union Territories which have amended their
Co-operative Societies Act as required under the DICGC Act, 1961,
empowering RBI to order the Registrar of Co-operative Societies of
the respective States/Union Territories to wind up a co-operative
bank or to supersede its committee of management and requiring the
Registrar not to take any action for winding up, amalgamation or
reconstruction of a co-operative bank without prior sanction in
writing from the RBI, are treated as eligible banks. At present all
Co-operative banks are covered by the Scheme. The Union Territories
of Lakshadweep and Dadra and Nagar Haveli do not have Co-operative
Banks.
Registration of new banks as insured banks
Under Section 11 of the DICGC Act, 1961, all new commercial banks
are required to be registered as soon as may be after they are
granted licence by the Reserve Bank of India under Section 22 of the
Banking Regulation Act, 1949.
Following the enactment of the Regional Rural Banks Act, 1976 all
Regional Rural Banks are required to be registered within 30 days
from the date of their establishment in terms of Section 11A of the
DICGC Act, 1961.
Co-operative Banks - A new co-operative bank is required to be
registered as soon as may be after it is granted a licence by the
RBI.
A primary co-operative credit society becoming a primary
co-operative bank is to be registered within 3 months from the date
of its application for license.
A co-operative bank which has come into existence after the
commencement of the Deposit Insurance Corporation (Amendment) Act,
1968, as a result of the division of any other co-operative society
carrying on business as a co-operative bank, or the amalgamation of
two or more co-operative societies carrying on banking business at
the commencement of the Banking Laws (Application to Co-operative
Societies) Act, 1965 or at any time thereafter is to be registered
within three months of its making an application for licence.
However, a co-operative bank will not be registered, if it has been
informed by the RBI in writing that a licence cannot be granted to
it.
In terms of Section 14 of the DICGC Act, after the Corporation
registers a bank as an insured bank, it is required to send, within
30 days of the bank's registration, an intimation in writing to the
bank that it has been registered as an insured bank.
The letter of intimation, apart from the advice of registration and
registration number, gives the details about the requirements to be
observed by the bank, the rate of premium payable to the
Corporation, the manner in which the premium is to be paid by the
bank and the returns to be furnished to the Corporation etc. The
insured bank has to submit its first return and remit the amount of
premium within one month from the receipt of the letter, which is
dispatched by Registered post or the date of commencement of
business whichever is later. A copy of this letter is endorsed to
the Reserve Bank of India and also National Bank For Agriculture and
Rural Development (NABARD) in the case of Regional Rural Banks/State
co-operative banks and District Central co-operative banks.
Insurance coverage
IInitially, under the provisions of Section 16(1) of the DICGC Act,
the insurance cover was limited to 1,500/- only per depositor(s) for
deposits held by him (them) in the "same right and in the same
capacity" in all the branches of the bank taken together. However,
the Act also empowers the Corporation to raise this limit with the
prior approval of the Central Government. Accordingly, the insurance
limit was enhanced from time to time as follows:
5,000/- with effect from 1st January 1968
10,000/- with effect from 1st April 1970
20,000/- with effect from 1st January 1976
30,000/- with effect from 1st July 1980
1,00,000/- with effect from 1st May 1993 onwards.
Types of Deposits Covered
DICGC insures all bank deposits, such as saving, 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 banks;
(v) Any amount due on account of and deposit received outside India;
(vi) Any amount which has been specifically exempted by the
corporation with the previous approval of the RBI.
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