Q. With reference to the Deposit Insurance and Credit Guarantee Corporation (DICGC), consider the following statements:
1.DICGC is a subsidiary of the Reserve Bank of India (RBI) and provides deposit insurance coverage for all types of deposits, including those in cooperative banks.
2.The definition of reinsurance under the Insurance Laws (Amendment) Act, 2015, was strengthened to specifically prevent insurance companies from ceding 100 per cent of their risk, thus curbing “front company” practices.
3.The DICGC’s maximum liability currently covers deposits up to ₹1 lakh per depositor, including both principal and interest.
Which of the statements given above is/are correct?
Answer: A
Notes:
Explanation:
Statement 1: Correct. DICGC is a fully owned subsidiary of the RBI and covers all commercial banks, Local Area Banks, Regional Rural Banks, and Co-operative Banks.
Statement 2: Correct. The 2015 amendments introduced a definition of ‘re-insurer’ that prohibits an insurer from ceding 100% of the risk, which prevents them from acting merely as a ‘front company’ for a re-insurer.
Statement 3: Incorrect. The limit was increased to ₹5 lakh per depositor per bank in February 2020 by the government.
