Budget 2020:Deposit Insurance cover raised to ₹5 lakh

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News:The Finance minister has announced in the Budget that the Deposit insurance cover for bank deposits has been raised to Rs 5 lakh from Rs 1 lakh.

Facts:

About Deposit Insurance:

  • Deposit insurance is providing insurance protection of Rs 1 lakh to the depositor’s money by receiving a premium.
  • The government has set up Deposit Insurance and Credit Guarantee Corporation (DICGC) under RBI to protect depositors if a bank fails.
  • The Deposit cover is for deposits in commercial banks, regional rural banks (RRBs), local area banks (LABs) and cooperative banks and branches of foreign banks in India.
  • In Budget 2020,the Government has now raised this Deposit insurance cover to Rs 5 lakh from Rs 1 lakh.

About DICGC:

  • Deposit Insurance and Credit Guarantee Corporation (DICGC) is a subsidiary of the Reserve Bank of India(RBI).
  • It was established in 1978 as a statutory body under Deposit Insurance and Credit Guarantee Corporation Act,1961.
  • The act provides for the establishment of a Corporation for the purpose of insurance of deposits and guaranteeing of credit facilities and for other matters connected therewith or incidental thereto.
  • The Deputy Governor of RBI acts as its Chairman of DICGC.It is headquartered in Mumbai.