Analysis of Deposit Insurance and Credit Guarantee Corporation and Claim Settlements
The concept of insuring deposits kept with banks received attention for the first time in the year 1948 after the Banking crisis of Bengal. Banks play a pivotal role in the life of general public by performing its basic function of Accepting deposits and Advancing loan but in the present scenario the crisis of banks have increased by creating fear in the minds of its customers of losing hard earned money even after depositing in nationalized banks. The fear of losing money is more in private banks compared to public banks as the private are not following the guidelines of RBI.
Deposit Insurance and Credit Guarantee Corporation (DICGC) a subsidiary of Reserve Bank Of India has assured commercial banks to gain the trust of its customers and motivated small and medium depositors to keep faith on these financial institutions. DICGC works with the mission of bringing financial stability and securing public confidence in the banking system through provision of deposit insurance, particularly for the benefit of the small depositors.
The vision of the DICGC is “To be Recognised as one of the most efficient and effective deposit insurance providers, responsive to the needs of its stakeholders.”
The functions of the DICGC are governed by the provisions of “The Deposit Insurance and Credit Guarantee Corporation Act, 1961” (DICGC Act) and “The Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961” framed by the Reserve Bank in exercise of the powers conferred by sub-section (3) of Section 50 of the said Act. As DICGC has undergone a recent financial reforms by increasing its limit from RS.1 lakh to Rs. 5 lakhs which has brought more hope for commercial banks and its customers. DICGC basically covers all commercial banks including the branches of foreign banks functioning in India, Local Area Banks and Regional Rural Banks are covered under the DICGC.
The main objective is to study analytically the working of DICGC and role played so far by DICGC in safeguarding commercial banks and its customers by taking into consideration the aspects of total deposits insured, assessable deposits ,total number of banks insured and number of bank accounts receiving claim settlement by DICGC in last five years (2015 to 2019). The details of claim settlement made by DICGC to Co operative Bank with respect to Maharashtra State.
Keywords - DICGC (Deposit Insurance Credit Guarantee Corporation), Insurance, Depositors, Reserve Bank of India (RBI), DIC (Deposit Insurance Corporation) and CGO (credit Guarantee Corporation).