DICGC Insurance for FD

What is DICGC Insurance Cover?

DICGC, a division of RBI, under the Ministry of Finance, provides insurance cover of up to ₹5 lakh per depositor per bank, including both principal and interest, against savings, fixed, current, and other eligible deposit accounts. In case a bank is placed under All-Inclusive Directions (AID), DICGC is liable to settle insured deposits within 90 days, subject to the submission of depositor data by the bank.

Under this framework, nearly 50% of India’s assessable bank deposits are covered by insurance, and nearly 98% of bank accounts are fully protected. These coverage levels are significantly higher than global norms, where typically only 20–30% of assessable deposits and around 80% of accounts are insured.

DICGC Insurance Key Aspects to Know

Below are the key aspects that help depositors know how their money is protected in case a bank fails:

List of DICGC Insured Banks

DICGC provides insurance coverage to almost all major banking institutions regulated by the Reserve Bank of India. The scheme includes:

• Public Sector Banks (e.g., State Bank of India, Punjab National Bank)
• Private Sector Banks (e.g., HDFC Bank, ICICI Bank, Axis Bank)
• Small Finance Banks (e.g., Suryoday, Unity, AU Small Finance Bank)
• Regional Rural Banks (RRBs)
• Local Area Banks
• Most Co-operative Banks in India, including State, Central, and Primary Co-operative Banks, functioning in states or union territories that follow RBI guidelines.

Note: Primary co-operative societies and Non-Banking Financial Companies (NBFCs) are not insured by DICGC.

How Does DICGC Insurance Work?

The working of DICGC insurance is structured to safeguard depositors automatically during the event of a bank failure. Customers do not need to take any action to receive this protection.

Bank Registration and Premium Payment

All the banks offering FDs and regulated by the Reserve Bank of India are required to register themselves with DICGC for the purpose of providing deposit insurance. Once registered, they pay a fixed premium to the corporation for all the eligible deposits. This is at the entire cost of the bank and not at the cost of depositors.

Claim Settlement Process

When the Reserve Bank of India places a bank under moratorium or issues All-Inclusive Directions (AID) due to financial distress, DICGC initiates the deposit insurance settlement process.

• The bank must submit a depositor-wise report of outstanding deposits to DICGC within 45 days from the date of AID imposition by the applicable regulation.
• After receiving this data, DICGC checks the depositor details and enables payment of insured amounts via the bank’s administrator or appointed liquidator.
• For banks placed under All-Inclusive Directions, DICGC is liable to settle insured deposits within an overall 90-day statutory timeline, subject to the timely submission and verification of depositor data.

Automatic Payouts

Depositors are not required to submit claims or complete any paperwork. The insured amount is paid automatically by the liquidator or the bank administrator, based on the circumstances of the case.

Account Types and Coverage Rules

DICGC also determines payouts on the basis of the type of account and pattern of ownership.

• Individual Accounts: Each depositor is insured up to ₹5 lakh per bank, which includes both the principal and the accruing interest.
• Joint Accounts: Joint accounts are covered according to the combination of the account holders. For instance, an account in the names of A and B is considered separately from an account held by A and C.
• Multiple Accounts: If a depositor opens multiple accounts in one bank under the same name and capacity, every balance is added together and insured within a single applicable statutory overall limit of ₹5 lakh.

Illustration: How DICGC Insurance Applies

To explain how DICGC insurance works, review the case of Mr Rohan Mehta, who keeps several deposits within one bank account.

Deposits Held in Individual Capacity

Because all deposits are held in Mr Mehta’s personal name and capacity, they are grouped for insurance coverage.

Out of the total ₹5,40,000, ₹5,00,000 is insured, and ₹40,000 remains uninsured.

Deposits Held in Other Capacities (Same Bank)

Each of the deposits is considered individually, since they are maintained under different capacities.

Therefore, each capacity receives a separate DICGC insurance cover of up to ₹5 lakh, even though the deposits remain with the same bank entity.

Key Takeaways

DICGC (Deposit Insurance and Credit Guarantee Corporation) protects depositors against any loss in bank failure through the insurance scheme. Customers may receive DICGC insurance on fixed deposits, savings, current, and recurring accounts as well. The scheme offers statutory protection to depositors and ensures timely payout of insured deposits, especially when banks are placed under regulatory directions, strengthening the confidence and trust of the depositor across the banking network system.