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THE DEPOSIT INSURANCE AND CREDIT GUARANTEE CORPORATION ACT, 1961

Title : THE DEPOSIT INSURANCE AND CREDIT GUARANTEE CORPORATION ACT, 1961

Year : 1961



(1) The Central Government shall, by notification1*in the Official Gazette, establish a Corporation by the name of the Deposit Insurance Corporation which shall be a body corporate having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold or dispose of property and to contract, and may, by the said name, sue or be sued.

2*[1A) Any reference in this Act to the Deposit Insurance Corporation shall, on and from the date on which Chapter II of the Deposit Insurance Corporation (Amendment and Miscellaneous Provisions) Act, 1978, comes into force, be construed as a reference to the Deposit Insurance and Credit Guarantee Corporation.]

(2) The head office of the Corporation shall be at Bombay, but it may, with the previous sanction of the Reserve Bank, establish branches or agencies in any other place in India.

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1. Deposit Insurance Corporation was established with effect from 1-1-1962.

2. Inserted by Act 21 of 1978, Section. 8(4), (w.e.f. 15-7-78).
 
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(1) The authorised capital of the Corporation shall be one crore of rupees but the Central Government may, in consultation with the Reserve Bank, increase such capital from time to time, so however, that the total authorised capital shall not exceed 2*[fifty crores of rupees].

(2) The 3*[issued capital] for the time being of the Corporation shall be fully paid up and shall stand allotted to the Reserve Bank].

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1. Substituted for the original S. 4 by Act 56 of 1968, Section. 4.

2. Substituted for words "fifteen cores of rupees" by Banking Laws (Amendment) Act (1 of 1984), Section. 57 (w.e.f. 15-2-840.

3. Substituted for words "five crores" and "authorised capital" respectively by Act 21 of 1978, Section. 8(5) (w.e.f. 15-7-78).

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The general superintendence, direction and the management of the affairs and business of the Corporation shall vest in a Board of directors which may exercise all powers and do all acts and things which may be exercised or done by the Corporation.



(1) The Board of directors of the Corporation shall consist of the following, namely:-

1*[(a) The Governor, for the time being, of the Reserve Bank or, if the Reserve Bank, in pursuance of the decision of the Committee of the Central Board of Directors of that Bank, nominates any Deputy Governor for the purpose, the Deputy Governor so nominated, who shall be the Chairman of the Board;]

(b)2*[a Deputy Governor or any other officer] of the Reserve Bank nominated by that bank;

(c) An officer of the Central Government nominated by that Government;

3*[(d) Five directors nominated by the Central Government in consultation with the Reserve Bank, three of whom shall be persons having special knowledge of commercial banking, insurance, commerce, industry or finance and two of whom shall be persons having special knowledge of, or experience in, co-operative banking or co-operative movement and none of the directors shall be an officer of Government or of the Reserve Bank or an officer or other employee of the Corporation or a director, an officer or other employee of a banking company or a co-operative bank or otherwise actively connected with a banking company or a co-operative bank].

4*[(e) Four directors, nominated by the Central Government in consultation with the Reserve Bank, having special knowledge or practical experience in respect of accountancy, agriculture and rural economy, banking, co-operation, economies, finance, law or small-scale industry or any other matter, the special knowledge of, and practical experience in which, is likely, in the opinion of the Central Government to be useful to the Corporation].

5*[(2) (i). A director nominated under clause (b) or clause (c)6[or clause (d) or clause (c)] of sub-section (1) shall hold office during the pleasure of the authority nominating him; and

7*[(ii) Subject to the provisions contained in clause (i), a director nominated under clause (d) or clause (c) of sub-section (1), shall hold office for such period, not exceeding three years, as may be specified by the Central Government in this behalf9[***], and shall be eligible for renomination:

Provided that no such director shall hold office continuously for a period exceeding six years].]

(3) A person shall not be capable of being nominated as a director under clause (d)8[or clause (c)] of sub-section (1) if-

(a) He has been removed or dismissed from the service of Government or of a local authority or of a corporation or company in which not less than fifty-one per cent of the paid-up share capital is held by Government; or

(b) He is or at any time has been adjudicated as insolvent or has suspended payment of his debts or has compounded with his creditors; or

(c) He is unsound mind and stand so declared by a competent Court; or

(d) He has been convicted of any offence which in the opinion of the Central Government, involves moral turpitude.

(4) If a director nominated under clause (d) sub-section (1)-

(a) Becomes subject to any of the disqualifications mentioned in clauses (a) to (d) of sub-section (3); or

(b) Is absent without leave of the Board for more than three consecutive meetings thereof; or

(c) Becomes a director or an officer or an employee of an insured bank or is, in the opinion of the Central Government, otherwise actively connected with such bank; or

(d) Becomes an officer or other employee of Government or of the Reserve Bank or of the Corporation;his seat shall thereupon become vacant.

8*[(5) If a director nominated under clause (e) of sub-section (1)-

(a) Becomes subject to any of the disqualifications mentioned in clauses (a) to (d) of sub-section (3); or

(b) Is absent without leave of the Board for more than three consecutive meetings thereof, his seat shall thereupon becomes vacant].

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1. Substituted by Act 21 of 1978, Section. 8(g) (15-7-78).

2. Substituted by Act 56 of 1968, Section. 5(i).

3. Substituted for original clause (d), by Act 56 of 1968, Section. 5(ii).

4. Inserted by Act 21 of 1978, Section. 8(6) (w.e.f. 15-7-1978).

5. Substituted by Banking Laws (Amendment) Act (1 of 1984), Section. 58 (w.e.f. 15-2-84).

6. Inserted by Banking Public Finance Institutions and negotiable Instruments Laws (Amendment) Act (66 of 1988),section 24 (w.e.f. 30-12-88).

7. Substituted, by Banking Public Finance Institutions and negotiable Instruments Laws (Amendment) Act (66 of 1988),section 24 (w.e.f. 30-12-88).

8.Inserted, by Banking Laws (Amendment) Act (1 of 1984),section 58 (w.e.f. 15-2-84).

9. The following words "and thereafter until his successor assumes office" are to be omitted by the Banking Companies (Acquisition and Transfer of Undertakings) and Financial Institutions Laws (Amendment) Act, 2006, w.e.f. 16.10.2006 .

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(1) The Board shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings as may be prescribed.

(2) The Chairman or if for any reason he is unable to attend the director nominated under clause (b) of sub-section (1) of section 6 shall preside at meetings of the Board and, in the event of equality of votes, shall have a second or casting vote.



(1) The Board may constitute an Executive Committee consisting of such number of directors as may be prescribed.

(2) The Executive Committee shall discharge such functions as may be prescribed or may be delegated to it by the Board.

(3) The Board may constitute such other committees, whether consisting wholly of directors or wholly of other persons or partly of directors and partly of other persons as it thinks fit for the purpose of discharging such of its functions as may be prescribed or may be delegated to them by the Board.

(4) A committee constituted under this section shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings as may be prescribed.

(5) The members of a committee (other than directors of the Board) shall be paid by the Corporation such fees and allowances for attending its meeting and for attending to any other work of the Corporation as may be prescribed.



The directors of the Board shall be paid by the Corporation such fees and allowances for attending the meetings of the Board or of any its committees and for attending to any other work of the Corporation as may be prescribed:

Provided that no fees shall be payable to the Chairman or to the director nominated under clause (b) of clause (c) of sub-section (1) of section 6.
Last updated on July, 2016

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