The Deposit Insurance and Credit Guarantee Corporation (Amendment) Act, passed by Parliament in 2021, made significant changes in the landscape of deposit insurance in India.
Over Rs 1,500 crore has been paid to more than 1.2 lakh depositors of defaulting banks under the Deposit Insurance and Credit Guarantee Corporation (DICGC), since it came into existence in 1961, as per the Economic Survey 2021-22 tabled in Parliament on Monday.
The deposit insurance coverage that began with Rs 1,500 in 1961, was raised gradually to Rs 1 lakh in 1993. The amount remained static thereafter till 2020.
After the announcement in the Union budget 2020-21, the deposit insurance cover was increased from Rs 1 lakh to Rs 5 lakh per depositor per bank.
The Deposit Insurance and Credit Guarantee Corporation (Amendment) Act, passed by Parliament in 2021, made significant changes in the landscape of deposit insurance in India.
Under the Act, the Corporation is liable to pay the insured deposit amount to depositors of an insured bank. Such liability may arise when an insured bank undergoes liquidation, reconstruction or any other arrangement under a scheme, and merger or acquisition by another bank.
"Since the Act came into force, over Rs 1,500 crore has been paid to over 1.2 lakh depositors against their claims, as of early January 2022," the survey said.
With deposit insurance coverage of Rs 5 lakh per depositor per bank, the number of fully-protected accounts stood at 247.8 crore at end-March 2021, constituting 98.1 per cent of the total number of accounts at 252.6 crore, as against the international benchmark of 80 per cent.
In terms of amount, the total insured deposits stood at Rs 76.2 lakh crore at end-March 2021, constituting 50.9 per cent (up from about 30 per cent under Rs 1 lakh cover) of the total assessable deposits (Rs 149.7 lakh crore) as against the international benchmark of 20-30 per cent.