Procedure for Foreign Direct Invest...
Foreign Direct Investment means an amount of money transferred in India by foreign investors fo...
The notion of ensuring deposits kept with banks was discussed and considered on various occasions but it was only in 1961 when the Deposit Insurance Corporation (DIC) Bill was introduced in the Parliament on August 21, 1961. Insuring Deposits Thereafter it was passed by the Parliament and the Bill got the assent of the President on December 7, 1961. The Deposit Insurance Act, 1961 came into force on January 1, 1962.
Initially, the Insuring Deposits Insurance Scheme was extended only to functioning commercial banks. This included the State Bank of India and its subsidiaries, other commercial banks and the branches of the foreign banks operating in India. With the enactment of the Deposit Insurance Corporation (Amendment) Act, 1968, the ‘Corporation’, under the provisions of Section 13 A of the Act, had to bring the ‘eligible co-operative’in its cover as insured banks. An eligible co-operative bank meant a co-operative bank, be it a State co-operative bank, a Central co-operative bank or a Primary co-operative bank, in a State that has passed the enabling legislation amending its Co-operative Societies Act.
Insuring Deposits insurance was introduced to shield the depositors, particularly the small ones, from the risk of loss of their savings due to failures on the part of the banks. The aim was to avoid panic and to ensure stability and growth of the banking system.e; to promote financial stability.
The Government of India, in consultation with the Reserve Bank of India, further introduced a Credit Guarantee Scheme in July 1960. Through this, the RBI, acting as an agent of the Central Government, was vested with the duty of administration of the Scheme and was designated as the Credit Guarantee Organization (CGO) for guaranteeing the advances granted to small-scale industries by Banks and other Credit Institutions. Further, in 1971, the Reserve Bank of India by promoting a Public Limited Company named it Credit Guarantee Corporation of India Ltd. (CGCI). The establishment of the Credit Guarantee Schemes was:
In 1978, the DIC and the CGCI were unified to form the Deposit Insurance and Credit Guarantee Corporation (DICGC), the title was changed to the Deposit Insurance and Credit Guarantee Corporation Act, 1961.
Deposit Insurance and Credit Guarantee Corporation (DICGC), established on 15 July 1978, acts as a subsidiary of Reserve Bank of India.
The amalgamation was made with a view to integrating the functions of Insuring Deposits insurance and credit guarantee to meet the changing financial needs.
After the merger, the primary focus of the DICGC was on credit guarantees which can be witnessed by the fact that most large banks were nationalized.
The credit guarantees were then gradually phased out and the focus was shifted onto its core function of Deposit Insurance with the objective of avoiding panics in the market, reduce risk, and promoting financial stability.
The following changes were further introduced:
The DICGC insures all deposits such as savings, current, fixed, recurring, etc. deposits except the following types:
The Insured banks have to make a premium payment to DICGC on its total Insuring Deposits within two months. In event of a delay, banks are liable to pay penal interest at 8 percent above the Bank rate from the beginning of the financial half year till the date of payment. Hence, it is in bank’s own interest to pay the premium within due date so that payment should reach to DICGC within the stipulated dates.
Any person who has a grievance against any the Corporation may lodge his complaint to the Complaints Redressal Cell, details to which are provided on the site. The complaint should mention the details of the complainant, the department against which complaint is being made and the fact of the complaint supported by the documents relied upon by the complainant, if any. Members of the public can also approach the designated officers as mentioned on the site.
Also, The Insuring Deposits Insurance and Credit Guarantee Corporation (DICGC) is a public authority, thus falls under the ambit of the Right to Information Act, 2005. Thus, DICGC is obliged to provide information to members of the public upon being asked for certain categories of information to be exempt from disclosure as per the RTI Act.