DICGC: Deposit Insurance and Credit Guarantee Corporation

DICGC stands for the Deposit Insurance and Credit Guarantee Corporation. It is a wholly owned subsidiary of the Reserve Bank of India. Its head office is in Mumbai.

What does it do?

• It insures bank deposits. This protects small depositors if a bank fails.
• It works under the DICGC Act, 1961.
• It is part of India’s financial safety net.

Who pays for the insurance?

The insured bank pays the premium. The depositor pays nothing. This is a common trap.

DICGC is not one original body. It is the result of a merger in 1978.

What are the key dates?

• 1961: The Deposit Insurance Corporation Bill received the President’s assent on 7 December.
• 1 January 1962: The Deposit Insurance Corporation (DIC) started work.
• 1968: Cover reached co-operative banks.
• 14 January 1971: The Credit Guarantee Corporation of India (CGCI) was set up.
• 1975: Cover reached regional rural banks.
• 15 July 1978: DIC and CGCI merged to form DICGC.

Why does 1962 matter?

India was the second country in the world to start such a scheme. The first was the United States, in 1933. The first claim DICGC settled was for the depositors of the Bank of China, in 1963.

What did the merger change?

The 1961 Act was renamed. It became the Deposit Insurance and Credit Guarantee Corporation Act, 1961. After the merger, the focus moved to credit guarantees for a time.

It insures most deposit types. Each depositor has a ceiling in each bank.

What is covered?

• Savings, fixed, current and recurring deposits.
• Both principal and interest count towards the ceiling.
• The ceiling is ₹5 lakh per depositor, per bank.
• Commercial banks, regional rural banks and co-operative banks are covered.
• Primary co-operative societies are not insured.

What is left out?

• Deposits of foreign governments.
• Deposits of the Central and State governments.
• Deposits between banks.
• Amounts due on deposits received outside India.
• Any amount DICGC has exempted with RBI’s prior approval.

How does a worked example look?

Asha has ₹3 lakh in savings and ₹4 lakh in a fixed deposit in the same bank. Both are in her own name. DICGC adds them up to ₹7 lakh. It insures only ₹5 lakh. If she also holds ₹3 lakh in a second bank, that sum is insured separately.

What is “same right and same capacity”?

Accounts in one person’s own name are added together. A joint account, or an account held as a trustee or a guardian, is counted separately. Each such account gets its own ₹5 lakh cover.

The cover was raised on 4 February 2020. It went from ₹1 lakh to ₹5 lakh.

What changed?

• The old cap of ₹1 lakh had stood for 27 years.
• After the rise, about half of all assessable deposits were insured. Before, it was 29%.
• About 98% of all accounts were fully protected.

Is a further rise coming?

A senior official signalled in May 2025 that a higher limit was being weighed. The Government had not fixed an amount. No change has been announced. The limit in DICGC’s FAQ is still ₹5 lakh as of 9 October 2026.

Section 18A was added by the DICGC (Amendment) Act, 2021. It took effect on 1 September 2021. It fixes a deadline for payment.

When does it apply?

It applies when RBI places a bank under restrictions. These are called All Inclusive Directions. Depositors cannot freely reach their money. DICGC then becomes liable to pay on that date.

What are the three steps?

1. Within 45 days: the bank gives DICGC a list of each depositor’s outstanding deposit. 2. Within 30 days of the list: DICGC checks the claims and asks each depositor if they want the payout. 3. Within 15 days of that check: DICGC pays those who agreed.

The whole process must not exceed 90 days. One exception exists. RBI can push the start date back by up to 90 days while it finalises a merger or reconstruction. If RBI lifts the restrictions before payment, DICGC need not pay.

What did the law look like before?

Before 2021, a depositor waited for a bank to be wound up. DICGC then paid within two months of getting the liquidator’s claim list. That wait could last years.

No. They fix two different problems.

How do they differ?

What is the common mistake?

Some students think the 90 days is one block run only by DICGC. It is not. The bank has 45 days to send its list. DICGC then has 30 days to check and 15 days to pay.

Two recent cases show the rule at work.

What happened at New India Co-operative Bank?

• RBI placed the Mumbai bank under All Inclusive Directions on 13 February 2025.
• Depositors could not withdraw money at first.
• On 24 February 2025, RBI allowed up to ₹25,000 per depositor from 27 February.
• RBI said over half the depositors could then withdraw their full balance.

What happened at Shree Mahalaxmi Urban Co-operative Credit Bank?

• RBI cancelled the Gokak (Karnataka) bank’s licence by an order dated 16 June 2026.
• The bank stopped banking business at the close of 18 June 2026.
• Before that, DICGC had paid ₹88.21 crore under Section 18A, as of 9 June 2026.
• About 97.90% of depositors were entitled to their full deposits from DICGC.