RISK IN BANK DEPOSITS - DICGC COVER
- 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.
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- 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. The type of deposits insured by DICGC are savings, fixed,
current and recurring deposits. However, it needs to be
noted that deposits kept in different branches of a bank will be
bunched together for the purpose of insurance cover.
(However, deposits with different banks are insured separately).
Thus, we can say that through this scheme, each depositor is
assured of getting upto Rs.1 lac, including the principal and
interest amount, if ever your bank goes bust. This scheme is
applicable to all banks in including, foreign banks, cooperative
banks and regional rural banks.
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- The deposits held in join accounts in
more than one branches of a bank are treated as single holder
if the names of the holders appear in the same order in all these
accounts. However, if the order is changed, then these
qualify to be treated as held in different capacity and protection
of Rs 1 lac is available separately.
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- 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.
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- In case the bank gets liquidated, the
liquidator sends thelist to the DICGC, which will pay the sum to
the liquidator, who in turn will pass it on to the account holders
/ depositors. In case of merger of banks, the DICGC
distributes the amount through the bank which has taken over the
weak bank.
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- 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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