DICGC, Bank Deposit Insurance Cover Hiked to Rs 5 Lacs

DICGC Bank Deposit Cover Hiked to Rs 5 Lacs from existing Rs 1 lacs per bank in Union Budget 2020 – Union Finance Minister had proposed to hike the bank deposit insurance in scheduled commercial banks to Rs 5 lakh per depositor from the current Rs 1 lakh in union budget 2020.

Currently, as per the RBI guidelines, deposits with all commercial banks and cooperative banks are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC). Only Primary Cooperative Societies are not covered under DICGC.

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Existing Policy of  DICGC Deposit Insurance Coverage

Each depositor in a bank is insured up to Rs 1 lakh for both the principal and interest amount on depsoits held by him in that particular bank. This includes all deposits held by a person in current account, savings account, fixed deposits and so on. If the total of all the deposits held by an individual in a singe bank exceed Rs 1 lakh, then he/she will be able to get only Rs 1 lakh inclusive of principal and interest amount if the bank goes bankrupt.

For Example, if PMC Bank account holder’s deposit amount exceeds Rs 1 lakh and the bank goes completely bankrupt, then the depositor can only get Rs 1 lakh. This has come after the recent PMC bank epsiode.

What kind of deposits are covered

DICGC covers all deposits such as savings, fixed, current, recurring and so on except for the following 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 Reserve Bank of India

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What if you have accounts at different branches of the same bank?

Currently, the insurance cover offered by the DICGC covers all different accounts of one depositor held with different branches of the same bank for maximum of Rs 1 lakh. Therefore, if you have more than one account with the same bank (even if in different branches), then, too, you will be insured for Rs 1 lakh only.

However, deposit insurance coverage limit is applied separately to the deposits in different banks.

For instance, let us say you have an account with ‘SyndicateBank’ and ‘Canara Bank’. Then, both the accounts will be separately insured up to Rs 1 lakh.

Deposit Insurance Coverage on joint accounts?

As per the RBI, both single and joint accounts will be separately covered under the DICGC scheme.

For e.g. :  You have a savings account which is operated solely by you and another one jointly operated with your spouse. In case you bank fails, then in such a case, both the accounts will be separately insured under the deposit insurance scheme.

Input by ET