Under deposit insurance, all RBI regulated lenders are required to pay annual insurance premium to the Deposit Insurance Credit Guarantee Corporation. The DICGC is an RBI subsidiary that pays out eligible depositors of banks under any moratorium. The eligibility is a proven deposit of up to Rs 5 lakh in every bank.
The Deposit Insurance And Credit Guarantee Act details how depositors of banks under similar RBI action can claim their deposits. The act has specific timelines for each activity, which are closely followed in such cases. This typically takes up to 90 days.
Within the first 45 days of the RBI placing a bank under moratorium, a list of all eligible depositors is created.
Once the list is shared with the DICGC, it has 30 days to verify the data and ascertain whether the depositor would like to immediately receive the insured funds, through an online portal or any other method it deems fit.
After the confirmation process is completed, it has 15 days to make the payments directly to the depositor or transferred to any bank account of their choice.
If the RBI were to introduce any scheme of amalgamation or reconstruction for the stressed bank within the 90 day repayment period, the repayment period gets extended by another 90 days, according to the amendment.
Moreover, if the RBI were to remove its restrictions and the insured bank is capable to paying depositors their full dues, before the repayment period runs out, the DICGC will be free from any payment liabilities.
