Deposit Insurance and Credit Guarantee Corporation Bill 2021

Deposit Insurance and Credit Guarantee Corporation (DICGC) is a wholly owned subsidiary of the RBI, created by an act of parliament in 1961.

DICGC provides insurance cover on bank deposits. The idea behind the DICGC is to boost the faith of the public in the banking system, and provide protection against the loss of deposits to a significant extent.
In 2020, the RBI increased the DICGC insurance cover on bank deposits from Rs 1 lakh to Rs 5 lakh.
Banks covered by Deposit Insurance Scheme: All commercial banks, Local Area Banks, Regional Rural Banks and Co-operative Banks.
Deposit insurance facility of DICGC is not available to depositors of NBFCs.
The Rs 5-lakh deposit insurance cover addresses 98.3 per cent of all deposit accounts by number, and 50.9 per cent of deposits by value. Globally, deposit insurance coverage is only 80 per cent and it covers only 20-30 per cent of deposit value.

- In a bid to ensure timely support to depositors of stressed banks, the Union Cabinet has given its approval to the Deposit Insurance and Credit Guarantee Corporation Bill 2021, which provides funds up to Rs 5 lakh to an account holder within 90 days in the event of a bank coming under the moratorium imposed by the RBI.

A moratorium is a temporary suspension of activity until future events warrant lifting of the suspension or related issues have been resolved.

Earlier, account holders had to wait for years till the liquidation or restructuring of a distressed lender to get their deposits that are insured against default.
In addition to this, the Deposit Insurance premium normally paid by banks to the DICGC is being raised from 10 paise for every ₹100 deposit, to 12 paise and a limit of 15 paise has been imposed. Finance Minister Nirmala Sitaraman said this was only an enabling provision and the determination of an increase in the premium payable would involve consultations with the RBI and require government approval.
The Bill will be taken to Parliament in the ongoing session.

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