49% Bank Deposits Worth Rs81.10 Lakh Crore Insured with DICGC: Govt
Moneylife Digital Team 08 August 2022
The Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the Reserve Bank of India (RBI), has insured 49% of assessable deposits out of total bank deposits of Rs1.65 lakh crore, the Union government informed the Lok Sabha. 
In a written reply, the minister of state for finance stated, "...the number of fully protected accounts at end-March 2022 constituted 97.9% of the total number of accounts. In terms of amount, the total insured deposits as at end-March 2022 stood at Rs81.10 lakh crore and constituted 49.0% of assessable deposits Rs165.49 lakh crore." 
"This is higher than the guidance of the International Association for Deposit Insurance (IADI) which recommends coverage of number of accounts up to 80% and 20-30% in value terms. As per the core principle of effective deposit insurance, cover should be limited, credible, cover vast majority of deposits, and subject to market discipline. Cover given by DICGC is according to this principle," the minister says.
Keshari Devi Patel, a member of Parliament (MP), has asked about steps being taken to protect the interests of the investors and account holders having fixed deposits (FDs) in banks. The MP also asked if the government proposes to safeguard investors who have deposits of more than Rs5 lakh and would lose any amount above this in case of a bank default.
The minister says, from 4 February 2020, DICGC raised the limit of insurance cover for depositors in insured banks to Rs5 lakh from the earlier level of Rs1 lakh per depositor. "The deposit insurance cover of Rs5 lakh is applicable uniformly to all insured banks and their depositors and is payable to any depositor in respect of deposits held by him/ her in the same right and same capacity at all the branches of an insured bank taken together, in case of liquidation/ failure of a bank," he added.
According to the minister, from 1 September 2021, a new Section 18A was inserted in the DICGC Act, enabling depositors to get easy and time-bound access to their deposits to the extent of deposit insurance cover through interim payments by DICGC in cases of imposition of restrictions on banks under the Banking Regulation Act, 1949 such as when banks are placed under 'all inclusive directions' (AID) by RBI. 
"In such cases, DICGC is liable to make interim payments to depositors up to the deposit insurance cover of Rs5 lakh within 90 days of the imposition of such directions. The time-bound payment to depositors of banks placed under AID has paved the way for improving public confidence in the banking system and has also helped in strengthening financial stability," the minister says.
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