Economics • Banking & FinanceEasy
What is the primary function of the 'Deposit Insurance and Credit Guarantee Corporation (DICGC)' in India?
A. Insuring all bank deposits up to a specific monetary limit per depositor per bank in case of bank failure.✓ Correct Answer
B. Providing insurance coverage against foreign exchange fluctuations for exporters.
C. Guaranteeing corporate bonds issued by infrastructure companies.
D. Insuring agricultural loans against crop failure and natural disasters.
💡 Solution & Explanation
The Deposit Insurance and Credit Guarantee Corporation operates as an RBI subsidiary, insuring domestic bank deposits up to a statutory ceiling of five lakh rupees per depositor per insured bank. Export credit insurance is managed separately by bodies like ECGC, avoiding overlap with commercial bank deposit protection schemes. This deposit guarantee mechanism safeguards retail investors and reinforces confidence in the formal banking system.
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