Everyone believes that a deposit with a bank is very safe and risk free.
What made the people believe so?
Its none other than DICGC
Deposit Insurance and Credit Guarantee Corporation – wholly owned subsidiary of RBI
Governed by – DICGC Act, 1961
To contribute to financial stability by securing public confidence in the banking system through provision of deposit insurance, particularly for the benefit of the small depositors.
i. Commercial Banks
ii. Branches of foreign banks functioning in India
iii. Local Area Banks
iv. Regional Rural Banks
v. At present all Co-operative banks
It is mandatory for every commercial bank, RRB, Co-op Society to get insured with DICGC as soon as they get their licence from RBI as per their respective governing acts (Banking Regulation Act, 1949, Regional Rural Banks Act, 1976)
Per Depositor – Rs. 5,00,000/- with effect from 4th February 2020 onwards.
Central Govt has got the power to approve DICGC to raise this limit.
All types of deposits except –
12 paise per 100 of assessable deposits per annum from April 1, 2020 onwards
Financial burden on account of payment of premium should be borne by the banks themselves and should not be passed on to the depositors
Similar to CA Exams, the premium will be paid in Every May & November
Deposits received by the bank till the date of cancellation remain covered.
Every bank is required to furnish a half yearly return (Form DI) also to the Corporation
In the event of the winding up or liquidation of an insured bank, every depositor of the bank is entitled to payment of an amount equal to his deposits subject to the ceiling amount of Rs. 5,00,000.
That is the reason why Amount with banks is very safe and secure