DICGC pays out Rs 48.74 crore so far in this financial year
IN APRIL, a year and two months after the Reserve Bank of India cancelled the license of their bank, the depositors of Kolhapur-based Ichalkaranji Urban Co-operative Bank were paid back their deposit sums up to a maximum of Rs 1,00,000 per depositor amounting to an aggregate sum of Rs 48.74 crore.
In FY12, this has been the only deposit insurance claim paid out by Deposit Insurance and Credit Guarantee Corporation (DICGC) as per the company's website.
An FCRB analysis of deposit insurance claims in earlier financial years reveal an interesting picture of banks' failure and the sums involved
DICGC's insurance benefit is only available to the extent of Rs 1,00,000 per depositor across a depositor's deposits in savings account, term deposits and current account. This limit has not changed since May 1993, and prior that, from July 1980 to April 1993, the limit was just Rs 30,000.
Since its inception in 1962, DICGC has paid out about Rs 3,908 crore in claims out of bank failures.
Around one-fourth has come in the last four years, from April 2007 to April 2010, itself when DICGC paid out about Rs 1,200 crore to depositors of about 105 banks. The interesting part is that almost half of this has been on account of just the top 10 failed banks whose depositors received an aggregate of Rs 588 crore.
The analysis also revealed almost all bank failures were among co-operative banks.
About 2,062 co-operative banks are presently covered by DICGC's insurance cover with 572 of them based in Maharastra followed by 293 in Karnataka and 266 in Gujarat. At present, DICGC also covers 82 commercial banks, encompassing public, private and foreign banks, 82 regional rural banks and four local area banks.
Banks have to pay an insurance premium of Rs 0.10 per Rs 100 of insured deposits to DICGC every year to avail the deposit insurance cover. As at the end of March 2010, DICGC had a deposit insurance fund of Rs 20,152 crore made up from premiums received from banks and interest earned on the fund corpus.
This is small, less than half a per cent, in comparison with the total deposits of Rs 53,19,256 crore outstanding with commercial banks as of May 20, as per RBI data, but since DIGCG covers only Rs 1,00,000 of every depositor, the sum insured would be lower. According to DICGC's annual report for 2009-10, the value of insured deposits among 2,249 insured banks was Rs 23,69,483 crore at the end of the FY, covering 14,238 lakh depositor accounts.
