RISK IN BANK DEPOSITS - DICGC COVER

(DICGC : Deposit Insurance and Credit Guarantee Corporation )

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  • Deposits in Banks are relatively safe in Banks.   However, large deposits in small banks or cooperative banks or weak banks are not totally risk free and in case of failure of these banks, you may loose a part of your hard earned money.
  • At present Banks are compulsorily required to get their deposits insured from Deposit Insurance and Credit Guarantee Corporation (DICGC).   However, DICGC at present insures deposits only upto Rs.1 lakh.   Thus, deposits in banks upto Rs.1 lakhs are safe and secure from the default by the bank.
  • At present uniform premium is paid by all banks to DICGC.   (Banks are required to pay premium to DICGC for this insurance of the deposits @ 10 paise / Rs.100/- p.a. on all deposits).  However, RBI is thinking of levying risk-based premiums on banks.  If it is done so, the banks paying higher premium will be treated as more risky then the banks paying lower premium.
  • In case of weak banks, RBI sometimes imposes number of restrictions on the operation of the accounts for a limited period, e.g. before merger of the bank with other bank etc.  Although, you may not face default by the bank, yet you can be put to lot of inconvenience and your business may suffer on that count.
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