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Tuesday, October 15, 2019

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Bank Deposit Insurance : Procedure for depositors to claim money from a failed bank

 Bank Deposit Insurance : Procedure for depositors to claim money from a failed bank

By Mr. S. Manikandan,

When a bank fails, a depositor should  know about the safety of his hard earned money.

When a bank is liquidated, depositors are entitled to receive an insurance amount of  Rs.1 lac per individual.

Rs.1 lac Insurance limit is applicable across all the accounts held by an individual depositor.

Due to this limit only Rs.33.7  lac crore of the Rs.120 lac crore deposit balances with the banks were insured.

 Every insured bank pays premium amounting to 0.001% of its deposits to DICGC every year.

Mr. S.  Manikandan, AIS MONEY

 DICGC (Deposit Insurance and Credit Guarantee  Corporation of India) a wholly owned subsidiary of RBI.

DICGC has so far settled depositors claims (when banks have gone bust)

Rs.295.9 crore with respect to 27 commercial banks

Rs.4,822 crore with respect to 351 cooperative banks

Failures have been a more common occurrence  with cooperative banks

Procedure for depositors to claim money from a failed bank

DICGC does not deal directly with depositors

RBI will appoint an official liquidator to oversee the process of winding up a failed bank

This liquidator is supposed to hand over a list of all the insured depositors to DICGC

DICGC is supposed  to pay these dues (Rs.1 lac Insurance payout) within 2 months of receiving the list

It took an average 1,425 days for the DICGC in FY19 to receive and settle the first claims on a de-registered bank.

 S. Manikandan, MBA ( F& M), [ MBA, I & FP], FChFP, CIS, AMFI, CII (London)
Mobile: 98405 77675
No. 21, MBT Road

(Opp) Indian Bank 
Walajapet - 632 513
Vellore Dt. TN, India


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