Depositor’s Insurance in India – All you need to know!
There are provisions in place by the central bank of the country in order to cushion the blow to the common population in case the banking mechanisms fail. One such provision is the Depositor’s Insurance. There are many details that are still unknown to people about this provision, so here is a comprehensive list of FAQs to help us out!
- What is the Depositor’s Insurance?
The RBI has a wholly owned subsidiary body called the Deposit Insurance and Credit Guarantee Corporation (DICGC). The agenda of this body is to insure deposits and guarantee credit facilities. If a bank is accruing losses and has to go for liquidation, this deposit cover financially helps the customers of a bank to have certain cover.
- What are the type of deposits covered by this insurance?
All types of deposits such as the savings deposits, RDs and term deposits are covered by DICGC. However, the deposits that are not covered are those which are government and inter-bank deposits. Also, the other deposits that are not covered are that of the state land development banks with the state co-operative banks.
- Which banks are insured by DICGC?
All commercial banks including branches of foreign banks functioning in India as well as All State, Central and Primary cooperative banks are covered by DICGC.
- What is the amount that insured by DICGC?
DICGC insures each depositor in a bank is insured up to a maximum of ₹ 5,00,000 (Rupees Five Lakhs) for both principal and interest amount held by the depositor.
There are many people who are associated with banks in one way or the other. The most common association that can be found is certainly that most of the people deposit their savings in a bank. However, financial literacy is still not up to the mark in our country. To be well aware of the risks and rewards that are associated with banking, it is important to be updated with the news. However, there are certain technical terms that have been a part of the recent news but are not understood by all. This directory gives a brief insight into such terms and meanings. Have a look!
- What is Moratorium?
A moratorium is a phase in which a complete freeze is placed on most of the activities of a bank. In India, Banking Regulation Act, 1949 exists and a provision of that Act in Section 45, grants the power to the RBI to place a moratorium for up to six months—this can also be extended. The agenda of bringing such provisions in place is to identify solutions and prevent further degradation of the bank.
- What is ECS?
ECS is the abbreviation for Electronic Clearing Service. This is the digital mode of transferring the funds from one bank account to another.
- What is Debit Mandates?
A bank mandate or debit mandate is a legal right in terms of authorisation that one gives to a third party to collect the required fixed amount from their bank account at regular intervals.