In India, bank failures are rare. However, when any bank fails, it can impact many of its depositors. So, whenever there is news of a bank failure, many depositors of other banks also wonder about the safety of their deposits with their respective banks.
It is here that DICGC comes in to protect bank depositors. In this article, we will understand who DICGC is, how it protects bank depositors, and to what extent.
Who is DICGC?
The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a corporation established under and governed by the provisions of ‘The Deposit Insurance and Credit Guarantee Corporation Act, 1961’. The corporation has been established with the principal purpose of insuring bank deposits. It also guarantees credit facilities. The DICGC is a wholly owned subsidiary of the Reserve Bank of India.
DICGC’s mission is to contribute to financial stability by securing public confidence in the banking system, by providing deposit insurance, particularly for the benefit of small depositors.
How does DICGC protect bank depositors?
The DICGC insures the deposits of all commercial and co-operative banks. The deposit insurance is mandatory, and no bank can withdraw from it. Each depositor in a bank is insured up to a maximum of Rs. 5 lakhs for the deposit principal and interest amount held by them in the ‘same right and same capacity’. Deposits held across different branches of the same bank are aggregated for the purpose of insurance, and a maximum of up to Rs. 5 lakhs per depositor is insured.
The DICGC insures all deposits with banks, such as savings, fixed, current, and recurring. For example, Rajesh has a savings account (balance Rs. 1 lakh) with one branch of a bank and a fixed deposit (Rs. 5.5 lakhs) with another branch of the same bank. In this case, Rajesh has total deposits of Rs. 6.5 lakhs, spread across two deposit accounts with two branches of the same bank. However, the insurance cover for Rajesh’s deposits will be Rs. 5 lakhs.
Which banks are insured by DICGC?
The DICGC insures the deposits of the following banks:
- All commercial banks, including public sector banks (PSBs), private banks, small finance banks (SFBs), payment banks, branches of foreign banks functioning in India, etc.
- All State, Central and Primary co-operative banks.
The DICGC deposit insurance doesn’t cover the following:
- Deposits of foreign Governments
- Deposits of Central/State Governments
- Inter-bank deposits
- Any deposit received outside India
- Any amount specifically exempted by DICGC with the previous approval of RBI
How can depositors manage deposits of more than ₹5 lakh?
The DICGC provides deposit insurance for up to Rs. 5 lakhs to each depositor (for all funds held in the same type of ownership) in a bank. If an individual wants to deposit more than Rs. 5 lakhs with DICGC insurance cover, they can split it under different types of ownership with the same bank, or split it across different banks.
With the same bank, a person can hold multiple deposit accounts in different capacity and different right, and get separate deposit insurance coverage of up to Rs. 5 lakhs for each of these accounts. Some of the examples of multiple deposit accounts held in different capacity and different right include the following:
- Individual account
- Joint account with spouse where the individual is the first holder
- Joint account with spouse where spouse is the first holder
- Deposit account in the capacity of a partner of a firm
- Deposit account in the capacity of a guardian of a minor
- Deposit account in the capacity of a director of a company
- Deposit account in the capacity of a trustee of a trust, etc.
Each of the above accounts is considered to be held in a different capacity and different right. Hence, each of the above accounts will enjoy an insurance cover of up to Rs. 5 lakhs separately.
Who pays the premium?
The banks pay the premium to DICGC to insure their deposits. The bank customers don’t pay anything. For insuring every deposit of Rs. 100, a bank pays a premium of 12 paise per annum. The deposit insurance scheme is mandatory, and no bank can withdraw from it. The list of all insured banks is published on the DICGC website home page.
How and when is DICGC liable to pay?
If a bank goes into liquidation, the liquidator prepares a depositor-wise claims list with the details of each depositor’s claim amount. The liquidator submits the claims list to the DICGC for scrutiny and payment. The DICGC is liable to pay the liquidator the claim amount of each depositor, up to Rs. 5 lakhs. DICGC must pay the amount within 2 months from the date of receipt of the claims list from the liquidator.
The liquidator must disburse the claim amount to each depositor corresponding to their claim amount. In case the bank that has failed has been amalgamated or merged into another bank, the amount due to each depositor is paid to the transferee bank.
It is important to note that the depositor doesn’t need to file a claim by submitting any claim form.
DICGC at a glance
Let us look at some of the DICGC statistics as of 31st March 2025.
| Number of registered insured banks | 1,982 |
| Fully protected accounts ratio | 97.6% |
| Insured deposits ratio | 41.5% |
| Premium collected | Rs. 26,764 crores |
| Deposit insurance fund | Rs. 2.28 lakh crores |
| Assessable deposits | Rs. 240 lakh crores |
| Insured deposits | Rs. 100 lakh crores |
| Total number of insured accounts | 293 crores |
| Total claims settled during 2024-25 | Rs. 476 crores |
Source: DICGC website
As shown in the above table, the DICGC has insured 97.6% of bank deposit accounts and 41.5% of deposits by value. The ratio is 41.5% because the insurance amount is capped at Rs. 5 lakhs, and many accounts have higher balances. Due to the Rs. 5 lakh insurance limit, out of the Rs. 240 lakh crores deposits across banks, only Rs. 100 lakh crores deposits are covered by DICGC.
DICGC plays a crucial role in the Indian banking system. It provides depositors with confidence that their deposits (up to Rs. 5 lakhs held in the ‘same right and same capacity’) are insured against a bank’s failure. When confident depositors maintain deposits with the bank, the bank can further lend them as loans to individuals, companies, etc., thereby contributing to nation-building.
How can you make the most of DICGC insurance cover?
If you are concerned about the safety of your deposits, you have two options. The first option is to hold multiple deposit accounts in different capacity and different right with the same bank. In this case, you will get a separate deposit insurance coverage of up to Rs. 5 lakhs for each account. The second option is to spread your deposits across multiple banks. In this case, each deposit account with each bank will get a separate deposit insurance coverage of up to Rs. 5 lakhs. You can also use a combination of both options as per your need and convenience.