Page 45 - Banking Finance August 2017

ARTICLE

Rural Banks (RRBs) are covered under the Deposit Insurance branches of that bank put together in the same capacity
Scheme.(ii) All eligible co-operative banks as defined in and in the same right, standing as on the date of
Section 2(gg) of the DICGC Act are covered. At present, all cancellation of registration (i.e., the date of cancellation
co-operative banks are covered under the Scheme. of licence or order forwinding up or liquidation) subject
to set-off of his dues to the bank, if any [Section
Insurance Premium: 16(1)read with 16(3) of the DICGC Act]. However,the

The Corporation collects insurance premia from insured payment to each depositor is subject to the limit of the
banks for administration of the deposit insurance system. insurance coverage fixed from time to time.
The premia to be paid by the insured banks are computed (ii) Further When a scheme of compromise or arrangement
on the basis of their assessable deposits. or re-construction or amalgamation is sanctioned for a
bank by a competent authority, and the scheme does
Insured banks pay advance insurance premia to the
not entitle the depositors to get credit for the full
Corporation semi-annually within two months from the
amount of the deposits on the date on which the
beginning of each financial half year, based on their deposits
scheme comes into force, the Corporation pays the
as at the end of previous half year. The premium paid by
difference between the full amount of deposit and the
the insured banks to the Corporation is required to be borne
amount actually received by the depositor under the
by the banks themselves and is not passed on to the
scheme or the limit of insurance cover in force at the
depositors.
time, whichever is less.
For delay in payment of premium, an insured bank is liable
to pay interest at the rate of 8 per cent above the Bank Fund maintained by the Corporation:
Rate on the default amount from the beginning of the The Corporation maintains three distinct Funds, viz.,
relevant half-year till the date of payment. (i) Deposit Insurance Fund (DIF); (ii) Credit Guarantee Fund

The rate of premium which initially was Rs 0.05 per 100 of (CGF), and (iii) General Fund (GF). The first two funds are
created by accumulating the insurance premia and
deposit has since been revised to Rs.0.10 wef 01.04.2005.
guarantee fees respectively and are applied for settlement
of the respective claims.
Credit Guarantee Corporation:
As no credit institution is participating in any of the credit The General Fund is utilised for meeting the establishment
guarantee schemes administered by the Corporation, and administrative expenses of the Corporation. The surplus
presently it is not operating any of the schemes and deposit balances in all the three Funds are invested in Central
insurance remains the principal function of the Corporation. Government securities. Inter-Fund transfer between these
funds is permissible under the Act.
Settlement of Claims :
Capital of the Corporation:
(i) In the event of the winding up or liquidation of an
insured bank, every depositor is entitled to payment of The authorised capital of the Corporation is 5 crores which
an amount equal to the deposits held by him at all the is entirely subscribed to by the Reserve Bank.

Performance of the corporation over the years
(taken from Annual report of DICGC as of 31st March 2016) (Values in crores rupees)
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
Assessable deposits 49,52,427 57,87,400 66,21,000 76,16,600 84,75,100 94,05,300
Insured deposits 17,35,800 19,04,300 21,58,300 23,79,100 26,06,700 28,26,400
Claim paid since inception 4,017 4,305 4,505 4,608 4,929 5,000
Deposit Ins. Fund 24,704 30,093 36,120 40,618 50,453 60,300

BANKING FINANCE | AUGUST | 2017 | 45

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