Economics • Banking & FinanceMedium
What is the primary function of the 'Deposit Insurance and Credit Guarantee Corporation (DICGC)', a subsidiary of the Reserve Bank of India?
A. To provide insurance cover on all bank deposits up to a specified monetary limit per depositor per bank.✓ Correct Answer
B. To guarantee micro-loans extended by women self-help groups.
C. To insure corporate bonds against default in the secondary debt market.
D. To provide credit guarantees for cross-border export shipments.
💡 Solution & Explanation
The Deposit Insurance and Credit Guarantee Corporation functions as a wholly owned subsidiary of the Reserve Bank of India, providing deposit insurance up to five lakh rupees per depositor per bank. This statutory coverage protects retail depositors against bank failures, covering savings, fixed, current, and recurring accounts collectively. Micro-loans and corporate bonds fall outside the purview of this specific deposit protection mandate. The DICGC traces its statutory origin to the Deposit Insurance Corporation Act passed by Parliament.
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