When a bank fails, its depositors become creditors of a broken company. Deposit insurance makes sure that most of them do not have to wait years for a liquidator. In India the insurer is the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly owned subsidiary of the RBI set up under the DICGC Act, 1961. It insures every bank the RBI licenses, from SBI to a small urban co-operative bank, for up to ₹5 lakh per depositor per bank, principal and interest together. On 31 March 2026 it insured 1,950 banks. At that limit about 97.4% of all deposit accounts are fully protected, but only about 40% of the money in them. This part explains how the cover works, what it leaves out, how the DICGC is funded, why almost every rupee it pays goes to co-operative banks, what changed when the premium became risk-based on 1 April 2026, and why there are calls to raise the ₹5 lakh limit.
This part goes deeper than the short section on safety nets in the RBI and financial stability (Part 15). Why banks fail in the first place is covered in why banks fail (Part 29), and the special weaknesses of co-operative banks in co-operative banks and RRBs (Part 34). Bank types and the RBI's supervisory tools, including PCA, are in RBI regulation of banks and NBFCs (Part 18).
In the news
- 21 October 2026: Puducherry Co-operative Urban Bank placed under directions. The RBI barred the bank from lending, investing or taking fresh deposits and capped withdrawals at ₹5,000 per depositor. The press release says eligible depositors can claim up to ₹5 lakh from the DICGC on giving their willingness. Why it matters for the exam: this is the standard "All Inclusive Directions" (AID) route that starts the 90-day clock for an interim DICGC payment.
- 8 October 2026: no withdrawals at Tiruvalla Urban Co-operative Bank. Directions under Section 35A of the Banking Regulation Act took effect from close of business on 8 October; depositors may not withdraw anything, but they may set off loans against deposits. Why it matters for the exam: nearly every bank placed under directions in 2025-26 and 2026-27 has been an urban co-operative bank (UCB).
- 31 July 2026: Handbook data for March 2026. The RBI's Handbook of Statistics (Table 71) shows 293.6 crore of 301.4 crore deposit accounts fully protected (97.4%) and insured deposits of ₹109.3 lakh crore out of assessable deposits of ₹275.4 lakh crore (39.7%), provisional. Why it matters for the exam: "about 97–98% of accounts but only about 40% of value" is the single most asked deposit-insurance fact.
- 18 June 2026: licence of Shree Mahalaxmi Urban Co-operative Credit Bank, Gokak, cancelled. The RBI said about 97.90% of its depositors were entitled to their full deposits from the DICGC, which had already paid ₹88.21 crore under Section 18A before the cancellation. Why it matters for the exam: Section 18A interim payments reach depositors before the bank is even liquidated.
- 29 May 2026: RBI Annual Report 2025-26. The Deposit Insurance Fund (DIF) reached ₹2,61,823 crore on 31 March 2026, up 14.4%; premium received was ₹29,947 crore; and claims of ₹1,988 crore were all paid for 72 UCBs. Why it matters for the exam: the size of the DIF and the fact that claims come only from co-operative banks are both examinable.
- 1 April 2026: risk-based premium takes effect. For the first time since 1962, banks no longer all pay the same rate: the flat 12 paise per ₹100 of assessable deposits becomes a ceiling (the "card rate"), and sounder banks pay less. Why it matters for the exam: the premium changed; the ₹5 lakh cover did not.
- 6 February 2026: DICGC issues the Risk-based Premium framework. Announced in the RBI's Statement on Developmental and Regulatory Policies of 1 October 2025 and approved by the RBI's Central Board on 19 December 2025, it sets a Tier 1 model for scheduled commercial banks (other than RRBs) and a Tier 2 model for RRBs and co-operative banks, with discounts of up to 33.33% for risk and 25% for vintage. Why it matters for the exam: the two tiers, the two discounts and the excluded banks are likely one-liners.
- 1 October 2025: DICGC Master Direction on premium and returns. Issued under Section 34(1) of the DICGC Act, it consolidated all earlier instructions on deposit insurance returns, auditor certificates and premium payment, now filed through the online portal "Samyak". Why it matters for the exam: it shows the DICGC, not only the RBI, can issue binding directions to insured banks.
Why deposit insurance exists
A bank borrows short (deposits that can be withdrawn at any time) and lends long (loans that cannot be called back overnight). That maturity mismatch is what makes banking useful, and it is also what makes a bank vulnerable to a run: if enough depositors fear the bank will fail and rush to withdraw, even a solvent bank can be forced to sell assets at a loss and fail. Each depositor is acting rationally; together they destroy the bank. How banks create money (Part 23) explains why a bank never holds enough cash to repay everyone at once.
Deposit insurance breaks this logic. If a small saver knows that her ₹2 lakh is safe whatever happens, she has no reason to queue outside the branch. The RBI's Annual Report describes three layers of defence: regulation and supervision as the first line, emergency liquidity from the central bank as the intermediate pillar, and deposit insurance as the layer that maintains public confidence. Deposit insurance does not stop banks failing; it stops a failure from turning into panic, and it protects those least able to judge a bank's health.
It has a cost: moral hazard. A fully insured depositor has no reason to check whether her bank is sound, and a bank with insured deposits can take more risk without losing funding. Two features limit this. The cover is capped, so large depositors still have money at risk and an incentive to watch. And, since April 2026, riskier banks pay a higher premium than safer ones.
The DICGC: history and structure
From DIC to DICGC
- 1961: Parliament passed the Deposit Insurance Corporation Act, after bank failures such as that of Palai Central Bank in 1960 had shaken depositors.
- 1 January 1962: the Deposit Insurance Corporation (DIC) began insuring deposits, on a flat-rate premium.
- 15 July 1978: the DIC was merged with the Credit Guarantee Corporation of India to form the Deposit Insurance and Credit Guarantee Corporation, and the Act was renamed the DICGC Act, 1961.
- Co-operative banks and RRBs were brought in later; today every bank the RBI licenses is covered.
The credit guarantee side has faded: today the DICGC is, in practice, a deposit insurer. Its head office is in Mumbai, and its capital of ₹50 crore is fully held by the RBI (Schedule 11 of the RBI's balance sheet). By convention its Chairman is an RBI Deputy Governor (Swaminathan J. led a DICGC delegation to the FDIC as Chairman in September 2025).
Who is insured
Registration is compulsory: every bank licensed by the RBI must register with the DICGC, and no bank can opt out. On 31 March 2026 there were 1,950 insured banks:
| Group | Number |
|---|---|
| Commercial banks | 124 |
| of which scheduled commercial banks (including 44 foreign banks) | 77 |
| of which regional rural banks | 28 |
| of which small finance banks | 11 |
| of which payments banks | 6 |
| of which local area banks | 2 |
| Co-operative banks | 1,826 |
| of which urban co-operative banks | 1,440 |
| of which state co-operative banks | 34 |
| of which district central co-operative banks | 352 |
The number fell from 1,982 a year earlier because 26 of 43 RRBs were amalgamated into 11 new ones (the "One State, One RRB" consolidation) and 17 UCBs dropped out, 9 through cancelled licences and 8 through mergers. Primary agricultural credit societies (PACS) and co-operative credit societies are not banks and are not insured.
What the cover is
₹5 lakh per depositor per bank
The cover is ₹5,00,000 per depositor per bank, for principal and interest together, since 4 February 2020. It was announced in the Union Budget of 1 February 2020, after the collapse of PMC Bank in September 2019, and raised from ₹1 lakh, the limit set in May 1993. Along with it the premium went up from 10 to 12 paise per ₹100 from 1 April 2020.
| From | Cover per depositor per bank |
|---|---|
| 1 January 1962 | ₹1,500 |
| 1 January 1968 | ₹5,000 |
| 1 April 1970 | ₹10,000 |
| 1 January 1976 | ₹20,000 |
| 1 July 1980 | ₹30,000 |
| 1 May 1993 | ₹1,00,000 |
| 4 February 2020 | ₹5,00,000 |
The 1993 limit stayed for almost 27 years, the longest gap in the series. By 2019 it protected only about 92% of accounts and 27% of deposits by value. The fivefold jump in 2020 pushed those numbers to 98% and 51% at once.
Three rules for the limit
- Per bank, not per branch. All of a depositor's accounts in all branches of one bank are added up. Deposits in different banks are insured separately, each up to ₹5 lakh. After a merger, deposits in the two old banks become deposits in one bank, and the limit applies once.
- Same right and same capacity. Deposits are added together only when held in the same capacity. A person's savings account, fixed deposits and current account in her own name are aggregated. A joint account with her spouse, an account she holds as guardian of a minor, as karta of an HUF, as a trustee or as a partner of a firm is a different capacity and is insured separately. Deposits of a sole proprietorship are not separate: the firm is the proprietor, so they are added to her individual deposits.
- Principal and interest together. Accrued interest counts towards the ₹5 lakh. An FD of ₹4.8 lakh with ₹40,000 of interest due is a claim of ₹5.2 lakh, of which ₹5 lakh is insured.
What is covered and what is not
Covered: all kinds of deposits (savings, fixed, current and recurring) with any insured bank in India, including branches of foreign banks.
Not covered: under the DICGC Act, assessable deposits exclude:
- deposits of foreign governments;
- deposits of the central and state governments;
- inter-bank deposits;
- deposits received outside India (for example, at an Indian bank's overseas branch);
- any deposit specifically exempted by the DICGC with the RBI's prior approval.
Many things people keep "at the bank" are not deposits and are not covered at all: mutual fund units, shares or bonds in a demat account, insurance policies sold by the bank, the contents of a locker, and deposits with NBFCs, chit funds or credit societies. NRI deposits held in India (NRE, NRO, FCNR) are deposits received in India and are covered like any other.
How depositors get paid
The DICGC pays in two situations.
When a bank is liquidated or merged
If the RBI cancels a bank's licence, the state Registrar (for a co-operative bank) or the court appoints a liquidator, who sends the DICGC a list of insured depositors. The DICGC pays the insured amounts through the liquidator, under Section 16(1) of the Act. If a failing bank is merged into another under a scheme, the DICGC can instead pay the acquiring bank to honour the deposits under Section 16(2). That is how the PMC Bank case was closed: when PMC was amalgamated with Unity Small Finance Bank on 25 January 2022, the DICGC provided ₹3,791.6 crore to Unity SFB for PMC's depositors.
The DICGC then becomes a creditor of the failed bank and is repaid out of whatever the liquidator recovers. In 2025-26 it got back ₹1,109 crore this way.
When a bank is put under directions: the 2021 amendment
Before 2021 the DICGC paid only when a bank was finally liquidated, which could take years. Depositors of PMC Bank waited, with withdrawals capped, from September 2019. The DICGC (Amendment) Act, 2021 fixed this. It was introduced in the Rajya Sabha on 30 July 2021, passed by the Rajya Sabha on 4 August and the Lok Sabha on 9 August, notified on 13 August and brought into force on 1 September 2021.
Under the new Section 18A, when the RBI restricts depositors' access to their money (through AID under Section 35A of the Banking Regulation Act, or a moratorium), the DICGC must make an interim payment of insured deposits within 90 days:
| Step | Who | Deadline |
|---|---|---|
| Submit the list of depositors and claims | The bank | Day 45 |
| Verify claims and confirm each depositor's willingness | DICGC | Day 75 (30 days later) |
| Pay | DICGC | Day 90 (15 days later) |
The 90 days can be extended by another 90 days if the RBI finds it expedient to finalise a scheme of amalgamation or reconstruction for the bank. There is no interim payment if the RBI lifts the restrictions and the bank can pay depositors itself. The bank must repay the DICGC later, and the DICGC can charge penal interest of up to 2 percentage points above the repo rate for delay. The amendment also lets the DICGC raise the statutory premium ceiling of 15 paise per ₹100 with the RBI's approval.
The change was large in practice. In 2021-22 alone, the DICGC paid ₹3,457.4 crore under Section 18A to depositors of 22 UCBs under AID, on top of ₹1,225.1 crore for liquidated banks and the PMC money. Its total claims that year, ₹8,516.6 crore, were the highest ever.
Worked example: the 90-day clock
The Puducherry Co-operative Urban Bank was placed under directions from the close of business on 21 October 2026. Counting forward:
- Day 45: 21 October + 10 days takes us to 31 October; 35 more days is 5 December 2026. The bank's list of depositors is due.
- Day 75: 30 days later is 4 January 2027. The DICGC must have verified claims and collected willingness.
- Day 90: 15 days later is 19 January 2027. Insured depositors should be paid.
(This is an illustration of the statutory timetable; the actual dates depend on when the DICGC's liability is treated as arising.)
Worked example: ₹8 lakh in one bank
Meera has two accounts at a co-operative bank that is placed under AID.
| Account | Amount |
|---|---|
| Savings account | ₹3,00,000 |
| Fixed deposit: principal | ₹4,60,000 |
| Fixed deposit: interest accrued | ₹40,000 |
| Total in her own name | ₹8,00,000 |
Step 1: aggregate. Both accounts are in the same bank, in the same name and capacity, so they are added together, interest included: ₹3,00,000 + ₹4,60,000 + ₹40,000 = ₹8,00,000.
Step 2: apply the limit. Insured = the lower of ₹8,00,000 and ₹5,00,000 = ₹5,00,000. Uninsured = ₹8,00,000 − ₹5,00,000 = ₹3,00,000, or 37.5% of her money.
Step 3: what happens to the ₹3 lakh. It is not lost by definition. Meera remains a creditor of the bank and may get some or all of it back if the bank is revived or merged, or from the liquidator's recoveries, but there is no guarantee and no timetable.
What she could have done:
- Keep ₹5 lakh in Bank A and ₹3 lakh in Bank B: each is under the limit, so all ₹8 lakh is insured.
- Keep ₹5 lakh in her own name and ₹3 lakh in a joint account with her husband in the same bank: different capacities, so again all ₹8 lakh is insured.
- Opening a second savings account in her own name at another branch of the same bank would not help: it is still the same bank and the same capacity.
A twist: loans. If Meera also owed the bank ₹1 lakh on a gold loan, the RBI's directions allow loans to be set off against deposits, so her net claim on the bank would be smaller.
Coverage: accounts versus value
The two ratios the DICGC tracks are:
- the fully protected accounts ratio: accounts with balances at or below the limit, as a share of all accounts;
- the insured deposits ratio: insured deposits as a share of assessable deposits (all deposits except the excluded categories).
| Date | Fully protected accounts | Insured deposits / assessable deposits |
|---|---|---|
| 30 September 2019 (cover ₹1 lakh) | 92.0% | 27.4% |
| 30 September 2020 | 98.1% | 50.9% |
| 31 March 2023 | 97.9% | 44.4% |
| 31 March 2025 | 97.6% | 41.5% |
| 31 March 2026 (provisional) | 97.4% | 39.7% |
The figures come from Table 71 of the RBI Handbook (July 2026), with ratios calculated from its raw numbers. On 31 March 2026, 293.6 crore of 301.4 crore accounts were fully protected; insured deposits were ₹1,09,33,948 crore out of assessable deposits of ₹2,75,43,642 crore.
The picture is lopsided because deposits are concentrated. Most accounts are small, but a minority of large accounts (companies, institutions and wealthy individuals) hold most of the money. The RBI's Annual Report for 2020-21 compared India with an international benchmark of about 80% of accounts and 20–30% of value. On both measures India's cover is generous.
The value share has been falling since 2020, from 50.9% to 39.7%, because deposits grow every year while the limit stays fixed. Insured deposits rose by 9.2% in 2025-26, assessable deposits by 14.3%.
By bank group (30 September 2025), co-operative banks are better covered than commercial banks: 98.1% of accounts and 60.7% of value, against 97.4% and 40.1% for commercial banks. Their depositors are smaller savers, which is one reason deposit insurance matters most for them.
One more yardstick: the RBI says the ₹5 lakh cover was 2.4 times GDP per capita in 2025-26, down from 4.0 times in 2019-20, the first year of the new limit.
Funding: premium and the Deposit Insurance Fund
The premium
The premium is borne entirely by the bank, not the depositor. It is levied on assessable deposits, in two half-yearly instalments. The flat rate history:
| From | Premium per ₹100 of assessable deposits per year |
|---|---|
| 1962 | 5 paise |
| 1971 | 4 paise |
| 1993 | 5 paise |
| 2004 | 8 paise |
| 2005 | 10 paise |
| 1 April 2020 | 12 paise (0.12%) |
The DICGC Act caps the premium at 15 paise per ₹100, a cap the DICGC can now raise with the RBI's approval. In 2025-26 the DICGC received ₹29,947 crore in premium, up 11.9%. Commercial banks paid about 95% of it, co-operative banks about 5%.
The risk-based premium from 1 April 2026
A flat premium makes a well-run bank pay the same price as a risky one, so in effect the safe banks subsidise the risky ones. Section 15(1) of the DICGC Act has always allowed different rates for different categories of banks, and the RBI has discussed a risk-based premium since at least its Annual Report for 2020-21. From 1 April 2026:
- Card rate: 12 paise per ₹100 of assessable deposits, now the maximum.
- Tier 1 model: scheduled commercial banks other than RRBs, rated on supervisory ratings, a CAMELS-based quantitative assessment (capital, asset quality, management, earnings, liquidity, systems) and the potential loss to the DIF if the bank failed.
- Tier 2 model: RRBs and co-operative banks, rated on CAMELS-based assessment and potential loss to the DIF (no supervisory rating).
- Risk-model incentive: up to 33.33% off the card rate.
- Vintage incentive: up to 25% off, for a long record of paying into the DIF without major distress or claims.
- Formula: Effective rate = Card rate × (1 − risk-model incentive) × (1 − vintage incentive).
- Still at the card rate: local area banks and payments banks (too little data, under 1% of premium) and UCBs under the Supervisory Action Framework or PCA, until the financial year after they exit.
- Banks must keep their ratings and premium confidential. The rating can be overridden if adverse information emerges. The framework will be reviewed at least once every three years.
Worked example. A bank has assessable deposits of ₹5,00,000 crore.
- At the card rate it pays 0.12% × ₹5,00,000 crore = ₹600 crore a year.
- With the maximum discounts: 12 × (1 − 0.3333) × (1 − 0.25) = 12 × 0.6667 × 0.75 = 6.0 paise, so it pays 0.06% × ₹5,00,000 crore = ₹300 crore. The best possible discount is therefore 50%, not 58.33% (33.33% + 25%), because the two discounts multiply rather than add.
- With a 20% risk discount and a 10% vintage discount: 12 × 0.80 × 0.90 = 8.64 paise, or ₹432 crore.
The Deposit Insurance Fund
The DIF is built from the DICGC's annual surplus: premium, plus interest on its investments (it invests in central government securities), plus recoveries from failed banks, minus claims paid and expenses, net of tax. It is the money that pays depositors.
| End-March | DIF (₹ crore) | Reserve ratio |
|---|---|---|
| 2019 | 93,750 | – |
| 2020 | 1,10,380 | 1.61% |
| 2021 | 1,29,936 | 1.70% |
| 2022 | 1,46,842 | 1.81% |
| 2023 | 1,69,602 | 2.02% (provisional) |
| 2024 | 1,98,753 | 2.11% |
| 2025 | 2,28,933 | 2.29% |
| 2026 | 2,61,823 | about 2.39% |
The reserve ratio is DIF ÷ insured deposits, the standard measure of an insurer's capacity. For March 2026: ₹2,61,823 crore ÷ ₹1,09,33,948 crore = 2.39%, using the provisional insured deposits from the Handbook. The ratio was 2.37% on 30 September 2025. For comparison, the RBI's 2019-20 Annual Report listed reserve ratios of 1.41% in the United States, 0.71% in the United Kingdom and 0.35% in Japan, with a range from 0.20% (Hungary) to 6.11% (the Philippines).
Is ₹2.6 lakh crore enough? It covers every claim the DICGC has ever paid many times over. But it is less than 1% of assessable deposits (₹2,61,823 ÷ ₹2,75,43,642 crore = 0.95%), and the insured deposits of one large bank would exceed it. The DIF is designed for the failure of small banks. A large bank is not expected to be liquidated: it would be rescued or merged, as Yes Bank and Lakshmi Vilas Bank were in 2020 (see why banks fail).
Who claims: co-operative banks
| Year | Claims settled (₹ crore) | Notes |
|---|---|---|
| 2019-20 | 80.7 | Sanctioned |
| 2020-21 | 564 | Nine co-operative banks |
| 2021-22 | 8,516.6 | PMC money via Unity SFB (₹3,791.6), 22 UCBs under AID (₹3,457.4), nine liquidated UCBs (₹1,225.1) |
| 2022-23 | 752.6 | 28 banks under AID (₹646.8) and supplementary claims of 11 liquidated banks (₹105.8) |
| 2023-24 | 1,431.5 | Co-operative banks |
| 2024-25 | 476 | 43 UCBs |
| 2025-26 | 1,988 | 72 UCBs; no claims from commercial banks |
The imbalance is the most striking fact about Indian deposit insurance. Commercial banks pay about 95% of the premium, but co-operative banks receive almost all the claims. In 2025-26, ₹1,470 crore of the ₹1,988 crore was paid in the first half of the year and ₹518 crore in the second.
Why? Commercial banks that get into trouble are rarely liquidated. The RBI and the government resolve them through mergers or reconstruction schemes, as with Global Trust Bank (merged into Oriental Bank of Commerce, 2004), Yes Bank (SBI-led reconstruction, March 2020) and Lakshmi Vilas Bank (merged into DBS Bank India, November 2020). Depositors of these banks never needed the DICGC. Small UCBs, by contrast, are often too small to merge and are wound up. Their governance problems (dual control by the RBI and the state Registrar until 2020, board capture, concentrated lending) are covered in co-operative banks and RRBs.
This is also the case for risk-based pricing: under a flat premium, well-run commercial banks have in effect been paying for the failures of weak co-operative banks.
India versus the world
| Country | Insurer | Cover per depositor per bank |
|---|---|---|
| India | DICGC (1962) | ₹5 lakh |
| United States | FDIC (1933) | US$250,000 per ownership category |
| United Kingdom | FSCS | £120,000 (from 1 December 2025, up from £85,000) |
Comparing raw amounts is misleading: incomes and deposit sizes differ hugely. The better comparison is the share of accounts and of deposits covered, or the cover as a multiple of income. India covers 97% of accounts with a limit of 2.4 times GDP per capita, which is generous by these measures.
The international standard-setter is the International Association of Deposit Insurers (IADI), whose Core Principles cover mandate, funding, coverage, payout speed and public awareness. The DICGC is a member and will host the IADI Asia Pacific Regional Committee's annual meeting in India in 2027.
The debate on raising the limit
After the crisis at New India Co-operative Bank in February 2025, the Financial Services Secretary, M. Nagaraju, said on 17 February 2025 that a proposal to raise the cover was under consideration and would be notified once the Cabinet decided. As of October 2026 no increase has been notified: the RBI's press release of 21 October 2026 still cites a ceiling of ₹5 lakh.
Arguments for raising it:
- The value covered has fallen from 50.9% (2020) to 39.7% (2026) as deposits have grown, and the cover has fallen from 4.0 to 2.4 times GDP per capita.
- Inflation erodes the real value of a fixed rupee limit. The ₹1 lakh limit of 1993 was left unchanged for 27 years.
- Retired people often hold their life savings in fixed deposits, often more than ₹5 lakh, in a single local co-operative bank.
- The DIF is large and growing (about 2.4% of insured deposits, high by international standards), so it could support a higher limit.
Arguments for caution:
- 97% of accounts are already fully covered. A higher limit mainly helps larger depositors, who are better able to spread their money across banks.
- A higher cover means more moral hazard and weaker depositor discipline, especially at weak co-operative banks.
- The reserve ratio would fall unless premiums rose, and premiums are a cost passed on to all bank customers.
- The real fix for co-operative bank failures is better regulation and resolution, not bigger payouts after the event.
The risk-based premium framework partly answers the last two objections: if a higher cover is announced, risky banks will now pay more for it.
Common exam traps
- Per depositor per bank, not per account or per branch. Two accounts in two branches of the same bank share one ₹5 lakh limit.
- Principal and interest together, not ₹5 lakh of principal plus interest on top.
- Different capacity is separate cover. A joint account is insured separately from individual accounts; a sole proprietorship's deposits are not.
- The premium is paid by banks, not depositors, and is levied on assessable deposits, not insured deposits.
- ₹5 lakh from 4 February 2020, not 1 February (the Budget announcement) or 1 April 2020 (when the 12 paise premium started).
- 90 days applies to banks under AID or a moratorium (Section 18A, from 1 September 2021). It can be extended by another 90 days.
- The risk-based premium did not change the cover. And the maximum discount is 50%, not 58.33%, because the discounts multiply.
- Commercial banks are covered too, including foreign banks' branches, SFBs, payments banks, RRBs and LABs. Credit societies, PACS and NBFCs are not.
- The DICGC is a subsidiary of the RBI, not of the Ministry of Finance, and by convention its chair is an RBI Deputy Governor.
Key facts at a glance
| Law | DICGC Act, 1961; insurance since 1 January 1962 |
| DIC + CGCI merged | 15 July 1978 |
| Owner | RBI (100%), capital ₹50 crore |
| Cover | ₹5 lakh per depositor per bank (principal + interest), since 4 February 2020 |
| Previous cover | ₹1 lakh, from 1 May 1993 |
| First cover | ₹1,500 (1962) |
| Insured banks (31 March 2026) | 1,950: 124 commercial, 1,826 co-operative |
| Fully protected accounts | 97.4% (March 2026, provisional); 97.5% (September 2025) |
| Insured deposits ratio | 39.7% (March 2026, provisional); 41.1% (September 2025) |
| Premium | Card rate 12 paise per ₹100 of assessable deposits; statutory cap 15 paise |
| Risk-based premium | From 1 April 2026; risk discount up to 33.33%, vintage discount up to 25% |
| Premium received (2025-26) | ₹29,947 crore; about 95% from commercial banks |
| DIF | ₹2,61,823 crore (31 March 2026), up 14.4% |
| Reserve ratio | 2.37% (September 2025); about 2.39% (March 2026) |
| Claims (2025-26) | ₹1,988 crore, all for 72 UCBs |
| Interim payment | Within 90 days of AID (Section 18A, from 1 September 2021): 45 + 30 + 15 days |
| United States / United Kingdom | US$250,000 (FDIC) / £120,000 (FSCS, from 1 December 2025) |
Exam corner: what to remember
- The DICGC is a wholly owned RBI subsidiary under the DICGC Act, 1961. Insurance began on 1 January 1962; the merger with the Credit Guarantee Corporation came on 15 July 1978.
- Cover: ₹5 lakh per depositor per bank, principal and interest, since 4 February 2020. History: ₹1,500 → ₹5,000 → ₹10,000 → ₹20,000 → ₹30,000 → ₹1 lakh (1993) → ₹5 lakh (2020).
- Aggregation is per bank and per capacity: joint, guardian, trustee, HUF and partnership accounts are separate; proprietorship accounts are not.
- Not covered: deposits of foreign governments, central and state governments, inter-bank deposits, deposits received outside India, and exempted deposits.
- DICGC (Amendment) Act, 2021, in force from 1 September 2021: interim payment within 90 days (45 + 30 + 15), extendable by 90; penal interest up to repo + 2%.
- Premium: flat 12 paise per ₹100 from April 2020; risk-based from 1 April 2026 (Tier 1 and Tier 2; up to 33.33% and 25% off; LABs, payments banks and UCBs under SAF/PCA at the card rate).
- Coverage: about 97–98% of accounts, about 40% of value.
- DIF ₹2,61,823 crore, reserve ratio about 2.4%; premium ₹29,947 crore (2025-26).
- Claims are almost all from co-operative banks: ₹1,988 crore for 72 UCBs in 2025-26; the peak was ₹8,516.6 crore in 2021-22 (PMC, first Section 18A payouts).
Test yourself
The deposit insurance cover of ₹5 lakh per depositor per bank came into effect on:
Show answer
Answer: (b) It was announced in the Budget of 1 February 2020 and took effect on 4 February 2020; 1 April 2020 is when the premium rose to 12 paise.
Under the risk-based premium framework effective 1 April 2026, which of these continues to pay the card rate?
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Answer: (c) Payments banks and local area banks stay at the card rate because of data limitations; UCBs under SAF or PCA also stay at the card rate until they exit.
Ravi has ₹4 lakh in a savings account and ₹3 lakh (including interest) in an FD at the same bank, both in his own name. If the bank is liquidated, how much is insured?
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Answer: (c) Both accounts are in the same bank and capacity, so they are aggregated to ₹7 lakh and capped at ₹5 lakh.
A bank has assessable deposits of ₹2,00,000 crore and earns the maximum risk-model and vintage incentives. Its annual deposit insurance premium is:
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Answer: (b) 12 × (1 − 0.3333) × (1 − 0.25) = 6 paise per ₹100, and 0.06% of ₹2,00,000 crore is ₹120 crore (at the card rate it would be ₹240 crore).
Which of the following deposits is NOT covered by DICGC insurance?
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Answer: (b) Deposits of the central and state governments are excluded; the others are ordinary insured deposits.
As per the RBI Annual Report 2025-26, the size of the Deposit Insurance Fund on 31 March 2026 was about:
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Answer: (d) It was ₹2,61,823 crore, up 14.4% from ₹2,28,933 crore a year earlier.
Under Section 18A of the DICGC Act, inserted in 2021, a bank under All Inclusive Directions must submit depositors' claims to the DICGC within:
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Answer: (c) The bank has 45 days, the DICGC 30 days to verify and 15 days to pay, 90 days in all.
Roughly what share of deposit accounts in India is fully protected by the ₹5 lakh cover?
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Answer: (d) About 97.4% of accounts (March 2026), although only about 40% of deposits by value are insured.
In 2025-26, the DICGC's claim payments of ₹1,988 crore went to depositors of:
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Answer: (b) All the claims were for 72 UCBs that were liquidated or under All Inclusive Directions; there were no claims from commercial banks.
The reserve ratio of a deposit insurer is defined as:
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Answer: (c) It measures the fund against what it may have to pay; India's was 2.37% in September 2025.
Further reading
- RBI, Risk-based Premium Framework for Deposit Insurance in India, 6 February 2026: the official summary of the two tiers, the incentives, the formula and the exclusions.
- RBI Annual Report 2025-26, Chapter VI: the latest official paragraphs on insured banks, coverage ratios, premium, claims and the DIF.
- RBI Handbook of Statistics on the Indian Economy, Table 71: DICGC – Insured Deposits: the long data series on fully protected accounts and insured deposits since 1987.
- PRS Legislative Research, the DICGC (Amendment) Bill, 2021: a clear summary of the 90-day interim payment law and the other changes.
- RBI Annual Report 2019-20, Chapter VI and Box VI.7: the 2020 cover increase and a cross-country comparison of reserve ratios.
- RBI Annual Report 2020-21, Chapter VI and Box VI.6: the RBI's own case for a risk-based premium, five years before it arrived.
- FDIC, Understanding Deposit Insurance: how the US system defines coverage by ownership category, a useful contrast with "same right and same capacity".
Sources
- RBI press release, Risk-based Premium Framework for Deposit Insurance in India, 6 February 2026: flat premium since 1962; card rate 12 paise; Section 15(1); Central Board approval on 19 December 2025; Tier 1 and Tier 2 models; incentives of 33.33% and 25%; formula; exclusions; confidentiality; effective 1 April 2026 (accessed 24 October 2026)
- RBI, Statement on Developmental and Regulatory Policies, 1 October 2025: announcement of the risk-based premium (accessed 24 October 2026)
- RBI Annual Report 2025-26, Chapter VI, 29 May 2026: 1,950 insured banks by type; 97.5% and 41.1% coverage ratios and reserve ratio of 2.37% (September 2025); cover 2.4 times GDP per capita; premium ₹29,947 crore; claims ₹1,988 crore for 72 UCBs; DIF ₹2,61,823 crore; the list of excluded deposits (accessed 24 October 2026)
- RBI Annual Report 2025-26, Chapter XII: the RBI's ₹50 crore holding (100%) in the DICGC (accessed 24 October 2026)
- RBI Annual Report 2024-25, Chapter VI: DIF ₹2,28,933 crore (March 2025) and ₹1,98,753 crore (March 2024); claims ₹476 crore for 43 UCBs; premium ₹26,764 crore (accessed 24 October 2026)
- RBI Annual Report 2023-24, Chapter VI: DIF ₹1,69,602 crore (March 2023); claims ₹1,431.5 crore in 2023-24 (accessed 24 October 2026)
- RBI Annual Report 2022-23, Chapter VI: claims of 2022-23; reserve ratio 2.02%; Section 18A timelines (accessed 24 October 2026)
- RBI Annual Report 2021-22, Chapter VI and Box VI.5: DIF ₹1,46,842 crore and reserve ratio 1.81%; ₹3,791.6 crore to Unity SFB for PMC; ₹3,457.4 crore to 22 UCBs; total claims ₹8,516.6 crore; amendment notified 13 August 2021, in force 1 September 2021; 15 paise cap; penal interest (accessed 24 October 2026)
- RBI Annual Report 2020-21, Chapter VI: DIF ₹1,29,936 crore and reserve ratio 1.70%; claims ₹564 crore; international benchmarks of 80% and 20–30%; three layers of the safety net (accessed 24 October 2026)
- RBI Annual Report 2019-20, Chapter VI and Box VI.7: ₹5 lakh from 4 February 2020; premium from 10 to 12 paise from 1 April 2020; DIF ₹1,10,380 crore and reserve ratio 1.61%; claims ₹80.7 crore; cross-country reserve ratios (accessed 24 October 2026)
- RBI Annual Report 2018-19: DIF ₹937.5 billion on 31 March 2019 (accessed 24 October 2026)
- RBI Handbook of Statistics, Table 71, 31 July 2026: fully protected and total accounts, insured and assessable deposits, 1987 to March 2026 (provisional); ratios in this article are calculated from it (accessed 24 October 2026)
- DICGC, The Safety Net newsletter, Issue 5 (October 2025–March 2026): bank counts and RRB/UCB changes; coverage ratios by bank group; DIF ₹2,46,292 crore and reserve ratio 2.37% (September 2025); premium split 95:5; claims by half-year; repayments ₹1,109 crore; Master Direction of 1 October 2025; IADI-APRC 2027 (accessed 24 October 2026)
- RBI press release, Puducherry Co-operative Urban Bank, 21 October 2026: directions from 21 October 2026; ₹5,000 withdrawal cap; ₹5 lakh DICGC cover (accessed 24 October 2026)
- RBI press release, Tiruvalla Urban Co-operative Bank, 8 October 2026: directions with no withdrawals allowed (accessed 24 October 2026)
- RBI press release, Shree Mahalaxmi Urban Co-operative Credit Bank, Gokak, 18 June 2026: licence cancelled; 97.90% of depositors fully covered; ₹88.21 crore paid under Section 18A (accessed 24 October 2026)
- PRS Legislative Research, DICGC (Amendment) Bill, 2021: introduction and passage dates; 45/30/15-day timetable; 90-day deferment; premium cap; penal interest (accessed 24 October 2026)
- Business Standard, 2 February 2020: Budget 2020 increase; cover raised from ₹30,000 to ₹1 lakh in May 1993 (accessed 24 October 2026)
- Business Standard, 17 February 2025: the Financial Services Secretary on a proposal to raise the cover after the New India Co-operative Bank crisis (accessed 24 October 2026)
- Wikipedia, Deposit Insurance and Credit Guarantee Corporation: cover limits before 1993 and premium rates from 1962 to 2005; the 1978 merger (accessed 24 October 2026)
- FDIC, Understanding Deposit Insurance: US$250,000 per depositor, per bank, per ownership category (accessed 24 October 2026)
- FSCS: UK limit raised to £120,000 on 1 December 2025 (accessed 24 October 2026)