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What is Deposit Insurance ?

  • Integrity Education, Delhi
  • 30, Jul 2021
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Context: The Union Cabinet cleared changes to the deposit insurance laws to provide funds up to Rs 5 lakh to an account holder within 90 days in the event of a bank coming under the moratorium imposed by the RBI.

Present Process
Account holders had to wait for years till the liquidation or restructuring of a distressed lender to get their deposits that are insured against default. 

About Deposit Insurance

  • A depositor has a claim to a maximum of Rs 5 lakh per account as insurance cover.
  • The cover is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC), which is a fully owned subsidiary of the Reserve Bank of India.
  • Depositors having more than Rs 5 lakh in their account have no legal recourse to recover funds in case a bank collapses.
  • The premium for this insurance is paid by banks to the DICGC