*20th Feb, 2025* *News of the Day* *Deposit insurance and the case of raising it* *Introduction* The government is considering increasing the insurance cover for bank deposits from the current limit of Rs 5 lakh. The deposit insurance cover is offered by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a specialised division of the Reserve Bank of India (RBI). *How are the deposits of customers insured against failure of the bank?* The objective of the DICGC is to protect “small depositors” from the risk of losing their savings in case of a bank failure. The insurance cover of Rs 5 lakh per depositor is for all accounts held by the depositor in all branches of the insured bank. *How does the limit for DICGC’s insurance coverage work?* Imposition of Restrictions: In 2021, a new Section 18A was inserted in the DICGC Act, 1961, which enabled depositors to get interim payment and time-bound access to their deposits to the extent of the deposit insurance cover through interim payments by DICGC, in case of imposition of restrictions on banks by the RBI. At present, the DICGC offers insurance cover on bank deposits up to Rs 5 lakh within 90 days of imposition of such restrictions. DICGC insures both the principal and interest amount held by a depositor in a bank. Liquidation of Bank: If the bank goes into liquidation, DICGC is liable to pay to the liquidator the claim amount of each depositor up to Rs 5 lakh within two months from the date of receipt of the claim list from the liquidator. The liquidator will have to disburse the right claim amount to each insured depositor. *Download the Complete Daily Current Affairs Pdf* https://www.prepmate.in/wp-content/uploads/2025/02/News-Juice-20th-February-2025.pdf