Deposit

Insurance
Are Bank Deposits insured
against bank failure
 Deposit Insurance
• Means insurance of deposit in Banks from
risk of bank failure

• Risk due to dispute between bank and

customer, fraud, bank robbery etc. not
covered

• Provided by Deposit Insurance and

Credit Guarantee Corporation (DICGC)
 DICGC
• Statutory Corporation
• Set up by RBI in 1962

• India second country to start deposit

insurance

• Provides insurance for bank deposits in

case of failure of Bank/liquidation
Scheme of deposit insurance
• Banks covered
- Commercial banks,
- Indian branches of Foreign Banks
- RRBs,
- Coop. Banks
 Deposits covered for insurance

• Deposits insured
- savings, current, fixed, recurring

• Deposit not covered

- deposits of CG,SG, Foreign Govts. ,
inter bank deposits
 Scheme

• Insurance coverage – Rs. 5 lakh per

depositor in all branches of a Bank ( both
principle and interest added)
 Illustration
SB CD FD Total insure
d
Mr. A.K. 15,000 25000 4,70,00 5.10 lac 5 lac
0
A.K. 0 55000 3,95,00 4.50 lac 4.5
partner 0 lac
AK 0 5 lac 12 lac 17 lac 5 lac
Director
of co
 Joint accounts in same Bank
A/C I A and B Max insurance
Rs. 5 lac
A/C II B and A Max insurance
Rs. 5 lac
A/C III A and D Max insurance
Rs. 5 lac
A/C IV A, B, K Max insurance
Rs. 5 lac
A/C V B, K, A Max insurance
Rs. 5 lac
 Account in different Bank
• Account in different Bank are treated as
different account – deposit insurance
coverage limit applies separately to each
Bank
• Account in same bank (all branches) are
treated in same right and same capacity-
these are clubbed together( maximum
insurance – Rs. 1 lac)
Accounts in different Banks

SBI IDBiIDBI ICICIICICI

Ram 5.6 lacs 20 lacs 80,000

Insurance 5 lac 5 lacs 80,000

amount
 Scheme

• Insurance premium – payable by bank

• Claims admissible on-

- winding up of Bank, failure of Bank
- amalgamation / reconstruction of
bank