Depositors in failed banks to get only ₹1 lakh as insurance cover: DICGC

According to the Deposit Insurance and Credit Guarantee Corporation (DICGC), depositors in failed and liquidated banks will get only up to ₹1 lakh as insurance cover, regardless of the amount in their accounts.

The DICGC, a wholly owned subsidiary of the Reserve Bank of India that insures all bank deposits, said in response to a Right to Information (RTI) query filed by PTI that this insurance will savings, fixed, current and recurring accounts.

"Under the provisions of Section 16 (1) of the DICGC Act, 1961, if a bank fails/gets liquidated, the DICGC is liable to pay to each depositor through the liquidator, the amount of his deposit up to ₹one lakh as insurance cover, for both principal and interest amount held by him in the same right and same capacity at all the branches of a bank taken together," it said.

"Each depositor in a bank is insured up to a maximum of ₹one lakh as on the date of liquidation/cancellation of bank's license or the date on which the scheme of amalgamation/merger/reconstruction comes into force," the DICGC said.

DICGC covers all commercial banks, including branches of foreign banks functioning in India, local area banks and regional rural banks.

All eligible cooperative banks as defined in Section 2(gg) of the DICGC Act are also covered by the deposit insurance scheme.

The RTI was filed in the wake of numerous instances of different banks becoming victim of frauds, while putting the savings of people at risk.

Government owned banks have reported frauds of over ₹95,700 crore in the first six months of the current fiscal.