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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



The Corporation shall register every existing banking company as an insured bank before the expiry of thirty days from the date of commencement of this Act.



The Corporation shall register every new banking company as an insured bank as soon as may be after it is granted a licence under section 22 of the1*[Banking Regulation Act, 1949],2[*****]

11A - 3*Registration Of Regional Rural Banks

The Corporation shall register every Regional Rural Bank, before the expiry of thirty days from the date of its establishment.]

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1. Substituted by Act 56 of 1968, Section. 2.

2. Words "or, as the case may be, after it is notified under Section 51 of the said Act omitted by Banking Laws (Amendment) Act (1 of 1984), Section. 59 (w.e.f. 15-2-84)

3. Inserted by Act 21 of 1976, Section. 33(5)(b) (w.r.e.f 26-9-75).

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Every banking company being a defunct banking company at the commencement of this Act, by reason of sub-clause (vii) or sub-clause (viii) of clause (f) of section 2 shall, unless it becomes a defunct banking company under any other sub-clause of that clause, be registered by the Corporation as an insured bank as soon as may be after the termination of the order moratorium or, as the case may be, the rejection of the application for its winding up.



1*[(1)] The registration of a banking company as an insured bank shall stand cancelled on the occurrence of any of the following events, namely:-

(a) if it has been prohibited from receiving fresh deposits; or

(b) If it has been informed by notice in writing by the Reserve Bank that its licence has been cancelled under section 22 of2[the Banking Regulation Act, 1949] or that a licence under that section cannot be granted to it; or

(c) If it has been ordered to be wound up; or

(d) If it has transferred all its deposit liabilities in India to any other institution; or

(e) If it has cased to be a banking company within the meaning of sub-section (2) of section 36A of 2*[the Banking Regulation Act, 1949] or has converted itself into a non-banking company; or

(f) If a liquidator has been appointed in pursuance of a resolution for the voluntary winding up of its affairs; or

(g) If in respect of it any scheme of compromise or arrangement or of reconstruction has been sanctioned by any competent authority and the said scheme does not permit the acceptance of fresh deposits; or

(h) If it has amalgamated with any other banking institution.

1*(2) The provisions of clauses (a),3[*] (c), (d) and (h) of sub-section (1) shall apply to a corresponding new bank as they apply to a banking company.]

4*[(3) The provisions of clauses (a),3[*] (c), (d) and (h) of sub-section (1) shall apply to a Regional Rural Bank as they apply to a banking company].

13A -5* Registration Of Co-Operative Banks

(1) No co-operative bank shall be registered under this section unless it is an eligible co-operative bank.

(2) Subject as aforesaid-

(a) The Corporation shall register every existing co-operative bank as an insured bank before the expiry of thirty days next following the commencement of the Deposit Insurance Corporation (Amendment) Act, 1968;

(b) The Corporation shall register as an insured bank-

(i) Every new co-operative bank [other than a primary credit society becoming a primary co-operative bank after the commencement of the Deposit Insurance Corporation (Amendment) Act, 1968] as soon as may be after it is granted a licence under section 22 of the Banking Regulation Act, 1949;

(ii) A primary credit society becoming a primary co-operative bank after such commencement within three months of its having made an application for licence under the said section.

6*[(iii) Every co-operative bank which has come into existence after the commencement of the Deposit Insurance Corporation (Amendment) Act, 1968, as a result of the division of any other co-operative society carrying on business as a co-operative bank, or the amalgamation of two or more co-operative societies carrying on banking business, at the commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965, or at any time thereafter, within three months of its having made an application for a licence under the said section;]

Provided
that a bank referred to in clause (b) shall not be so registered if it has been informed by notice in writing by the Reserve Bank that such a licence cannot be granted to it.

13B - Registration Of Defunct Co-Operative Banks

Every co-operative bank being a defunct co-operative bank at the commencement of the Deposit Insurance Corporation (Amendment) Act, 1968, by reason of sub-clause (vii) or Sub-cl. (viii) of clause (ff) of section 2 shall, unless it becomes a defunct co-operative bank under any other sub-clause of that clause, be registered by the Corporation as an insured bank as soon as may be after the termination of the order of moratorium, or as the case may be, the rejection or dismissal of the application for its winding up provided it is an eligible co-operative bank and it either holds a licence granted under section 22 of the Banking Regulation Act, 1949, or having applied for such licence in accordance with that section, has not been informed by notice in writing by the Reserve Bank that a licence cannot be granted to it.

13C - Cancellation Of Registration Of Co-Operative Banks

The registration of a co-operative bank as an insured bank shall stand cancelled on the occurrence of any of the following event, namely:-

(a) If it has been prohibited from accepting fresh deposits; or

(b) If it has been informed by notice in writing by the Reserve Bank that its licence has been cancelled under section 22 of the Banking Regulation Act, 1949, or a licence under that section cannot be granted to it; or

(c) If it has been ordered or directed to be wound up; or

(d) If it has transferred all its deposit liabilities in India to any other institution; or

(e) If it has ceased to be a co-operative bank within the meaning of sub-section (2) of section 36A of the Banking Regulation Act, 1949; or

(f) If it has converted itself into a non-banking co-operative society; or

(g) If in respect of it any scheme of compromise or arrangement or of reconstruction has been sanctioned by a competent authority and the said scheme does not permit the acceptance by it of fresh deposits; or

(h) If it has been amalgamated with any other co-operative society; or

(i) If it cases to be an eligible co-operative bank, that is, if the law for the time being governing such co-operative bank doe snot provide for all or any of the matters referred to in clause (gg) of section 2.

13D - Circumstances In Which Reserve Bank May Require Winding Up Of Co-Operative Banks

(1) The circumstances referred to in sub-clause (ii) of clause (gg) of section 2 (being circumstances in which the Reserve Bank may require the winding up of a co-operative bank) are the following, namely:-

(a) That the co-operative bank has failed to comply with the requirements specified in section 11 of the Banking Regulation Act, 1949; or

(b) That the co-operative bank has by reason of the provisions of section 22 of the said Act become disentitled to carry on banking business in India; or

(c) That the co-operative bank has been prohibited from receiving fresh deposits by an order under sub-section (4) of section 35 of the said Act or under clause (b) of sub-section (3A) of section 42 of the Reserve Bank of India Act, 1934; or

(d) That the co-operative bank having failed to comply with any requirement of the Banking Regulation Act, 1949, other than the requirements laid down in section 11 thereof, has continued such failure or, having contravened any provision of that Act has continued such contravention beyond such period or periods as may be specified in that behalf by the Reserve Bank from time to time, after notice in writing of such failure or contravention has been conveyed to the co-operative bank; or

(e) That the co-operative bank is unable to pay its debts; or

(f) That in the opinion of the Reserve Bank-

(i) A compromise or arrangement sanctioned by a competent authority in respect of the co-operative bank cannot be worked satisfactorily with or without modifications, or

(ii) The continuance of the co-operative bank is prejudicial to the interests of its depositors.

(2) Without prejudice to the provisions of any other law for the time being in force, a co-operative bank shall, for the purpose of clause (c) of sub-section (1), be deemed to be unable to pay its debts:-

(i) If, on the basis of the returns, statements or information furnished to the Reserve Bank under or in pursuance of the provisions of the Banking Regulation Act, 1949, the Reserve Bank is of opinion that the co-operative bank is unable to pay its debts; or

(ii) If the co-operative bank has refused to meet any lawful demand made at any of its offices or branches within two working days, if such demand is made at a place where there is an office, branch or agency of the Reserve Bank, or within five working days if such demand is made elsewhere and, in either case, the Reserve Bank certifies in writing that the co-operative bank is unable to pay its debts.

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1. Section 13 re-numbered as sub-section (1) thereof an sub-section (2) inserted thereafter by Act 5 of 1970.section 20(4) (b) (w.r.e.f. 19-7-1969).

2. Substituted by Act 56 of 1968.section2.

3. Brackets and Letter "(b)", omitted by Banking Laws (Amendment) Act (1 of 1984).section 60 (w.e.f. 15-2-84).

4. Inserted by Act 21 of 1976.section 33(5) (c) (w.r.e.f. 26-7-75).

5. Sections 13A to 13D inserted by the Deposit Insurance Corporation (Amendment) Act, 1968 (56 of 1968).

6. Inserted by Banking Laws (Amendment) Act (1 of 1984). Section.61 (w.e.f. 15-2-84)


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(1) Where the Corporation has registered any 1*[2*[banking company, Regional Rural Bank] or co-operative bank] as an insured bank, it shall, within thirty days of its registration, send an intimation in writing to the 1*[2*banking company, Regional Rural Bank] or co-operative bank] that it has been registered as an insured bank.

(2) Every such intimation shall indicate the manner in which the premium payable by the bank under section 15 may be calculated.

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1. Substituted for 'banking company' by Act 56 of 1968, Section. 8

2. Substituted for 'banking company' by Act 21 of 1976, Section. 33(5) (W.r.e.f. 26-9-1975).

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(1) Every insured bank shall, so long as it continues to be registered, be liable to pay a premium to the Corporation on its deposits at such rate or rates as may1*[with the previous approval of the Reserve Bank, be notified by the Corporation, from time to time, to the insured banks and different rates may be notified for different categories of insured banks.]

Provided
that the premium payable by any insured bank for any period shall not exceed fifteen  paisa peer annum for every hundred rupees of the total amount of the deposits in that bank at the end of that period or, where its registration has been cancelled during that period, on the date of its cancellation:

Provided further that where the registration of any insured bank is cancelled under section 13 2*[or under section 13C,] such cancellation shall not affect the liability of that bank for payment of premium for the period before such cancellation and of any interest due under the provisions of this section.

(2) The premium shall be payable for such periods, at such times and in such manner as may be prescribed.

(3) If an insured bank makes any default in payment of any amount of premium, it shall for the period of such default, be liable to pay to the Corporation interest on such amount at such rate1[not exceeding eight per cent. over and above the bank rate as may be prescribed].

15A -3* Cancellation Of Registration Of An Insured Bank For Non-Payment Of Premium


(1) The Corporation may cancel the registration of an insured bank if it fails to pay the premium for three consecutive periods:
Provided that no such registration shall be cancelled except after giving to the concerned bank one month's notice in writing calling upon that bank to pay the amount in default.

(2) The Corporation may restore the registration of a bank whose registration has been cancelled under sub-section (1), if the concerned bank requests the Corporation to restore the registration and pays all the amounts due by way of premia from the date of default till the date of payment together with interest due there on the date of payment:

Provided
that the Corporation shall not restore the registration unless it is satisfied, on an inspection of the concerned bank or otherwise, that it is eligible to be registered as an insured bank].

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1. Substituted for certain words by Act 21 of 1978, Section. 7 (w.e.f. 15-7-1978).

2. Inserted by Act 56 of 1968, Section. 9.

3. Inserted by Act 21 of 1978, Section. 8 (w.e.f. 15-7-78).

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(1) Where an order for the winding up or liquidation of an insured bank is made, the Corporation shall, subject to the other provisions of this Act, be liable to pay to every depositor of that bank in accordance with the provisions of section 17 an amount equal to the amount due to him in respect of his deposit in that bank at the time when such order is made:

Provided
that the liability of the corporation in respect of an insured bank referred to in clause (a) or clause (b)1*[of sub-section (1) of section 13]2*[or clause (a) or clause (b) of section 13C] shall be limited to the deposits as on the date of the cancellation of the registration.

Provided further
that the total amount payable by the Corporation to any one depositer in respect of his deposit in that bank in the same capacity and in the same right shall not exceed one thousand and five hundred rupees:

Provided further that the Corporation may, from time to time, having regard to its financial position and to the interests of the banking system of the country as a whole, raise, with the previous approval of the Central Government, the aforesaid limit of one thousand and five hundred rupees.

(2) Where in respect of an insured bank a scheme of compromise or arrangement or of reconstruction or amalgamation has been sanctioned by any competent authority and the said scheme provides for each depositor being paid or credited with on the date on which the scheme comes into force, an amount which is less than the original amount and also the specified amount, the Corporation shall be liable to pay every such depositor in accordance with the provisions of section 18 an amount equivalent to the difference between the amount so paid or credited and the original amount, or the difference between the amount so paid or credited and the specified amount, whichever is less:

Provided that where any such scheme also provides that any payment made to a depositor before the coming into force of the scheme shall be reckoned towards the payment due to him under that scheme, then the scheme shall be deemed to have provided for that payment being made on the date of its coming into force.

(3) For the purposes of this section, the amount of a deposit shall be determined after deducting therefrom any ascertained sum of money which the insured banks may be legally entitled to claim by way of set off against the depositor in the same capacity and in the same right.

(4) In this section-

(a) "Original amount" in relation to a depositor means the total amount due by the insured bank immediately before the date of coming into force of the scheme of compromise or arrangement or, as the case may be, of reconstruction or amalgamation to the depositor in respect of his deposit in the bank in the same capacity and in the same right:

Provided
that where under the proviso to sub-section (2), the scheme is deemed to have provided for any payment being made on the date of its coming into force the amount of such payment shall be included in calculating the original amount:

(b) "Specified amount" means one thousand and five hundred rupees, or, as the case may be, the amount fixed by the Corporation under the third proviso to sub-section (1).

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1. Substituted for words and figures "of section 13" by Banking Laws (Amendment) Act (1 of 1984), Section.62 (w.r.e.f. 19-7-69).

2. Inserted by Act 56 of 1968, Section. 10.

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(1) Where an insured bank has been ordered to be wound up or to be taken into liquidation and a liquidator, by whatever name called, has been appointed in respect thereof, the liquidator shall, with the lest possible delay and in any case not later than three months from the date of his assuming charge of office, furnish to the Corporation a list in such form and manner as may be specified by the Corporation showing separately the deposits in respect of each depositor and the amounts of set off referred to in sub-section (3) of section 16.

(2) Before the expiry of two months from the receipt of such list from the liquidator the Corporation shall pay1[the amount payable under section 16 in respect of the deposit of each depositor-

(a) Directly to the depositor, or

(b) To the depositer through such agency as the Corporation may determine, or

(c) To the liquidator.]

2*[(3) Where the Corporation pays under sub-section (2), any amount in respect of the deposit of a depositor to the liquidator, the liquidator shall pay or cause to be paid that amount to the depositor and any expenses incurred by the liquidator in making such payment shall be treated as expenses incurred in the winding up of the insured bank.]

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1. Substituted for certain words by Act 56 of 1968, Section. 11(i).

2. Inserted by Act 56 of 1968, Section. 11(ii).

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(1) Where a scheme of amalgamation of any insured bank with any other banking institution (hereinafter referred to as the transferee bank) or a scheme of compromise or arrangement or of reconstruction in respect of such bank has been sanctioned and the Corporation has become liable to pay to depositors of the insured bank under sub-section (2) of section 16, the transferee bank where the scheme is of amalgamation and the insured bank in any other case shall, with the least possible delay and in any case not later than three months from the date on which such scheme takes effect, furnish to the Corporation a list in such form and manner as may be specified by the Corporation and certified to be correct by the chief executive officer of the transferee bank or as the case may be, of the insured bank showing separately deposits in respect of each depositor and the amounts of set off referred to in sub-section (3) of section 16 and also the amounts paid or credited or deemed to have been paid under the scheme.

(2) Before the expiry of two months from the receipt of such list, the Corporation shall pay the amount payable under section 16 either directly to the depositor or to the transferee bank or the insured bank for being credited in his account.



Any amount paid by the Corporation under section 17 or section 18 in respect of a deposit shall to the extent of the amount paid, discharge the Corporation from its liability in respect of the deposit.



Where any depositor to whom any payment is to be made in accordance with the provisions of section 17 or section 18 cannot be found or is not readily traceable adequate provision shall be made by the Corporation for such payment and the amount of such provision shall be accounted for separately in its books.



(1) Where any amount has been paid under section 17 or section 18 or any provision therefore has been made under section 20, the Corporation shall furnish to the liquidator or the insured bank or to the transferee bank, as the case may be, information as regards the amount so paid or provided for.

(2) On receipt of the information under sub-section (1) notwithstanding anything to the contrary contained in any other law for the time being in force.-

(a) The liquidator shall, within such time and in such manner as may be prescribed, repay to the Corporation out of the amount, if any, payable by him in respect of any deposit such sum or sums as make up the amount paid or provided for by the Corporation in respect of that deposit;

(b) The insured bank or as the case may be, the transferee bank shall, within such time and in such manner as may be prescribed, repay to the Corporation out of the amount, if any, to be paid or credited in respect of any deposit after the date of the coming into force of the scheme referred to in section 18 such sum or sums as make up the amount paid or provided for by the Corporation in respect of that deposit.

21A - Guaranteeing Of Credit Facilities And Indemnifying Credit Institutions

(1) The Corporation may guarantee credit facilities given by any credit institution and may also indemnify credit institutions in respect of credit facilities granted by them.

(2) The Board may, for the purpose of guaranteeing credit facilities granted by credit institutions or indemnifying credit institutions, frame one or more schemes in such form and in such manner and containing such provisions as the Board may, from time to time, deem fit.

(3) The Board may levy, on every credit institution availing itself of the guarantees or indemnities provided by the Corporation, a fee at such rate or rates as may, with the previous approval of the Reserve Bank, be notified by the Corporation to the credit institution from time to time and different rates may be notified for different categories of credit institutions, for different types of credit facilities, for different areas where the credit facilities are utilised, or for different categories of beneficiaries of the credit facilities.

Explanation.- "Credit facility" means any financial assistance, including a loan or advance, cash credit, overdraft, bills purchased or discounted, a term of installment credit and any guarantee other than a performance guarantee, granted or issued in India by a credit institution at any of its offices in India.

21B - Corporation To Act As Agent Of Central Government

The Corporation may act as agent for the Central Government,-

(i) In guaranteeing the due performance by any small-scale industrial concern or other institution or undertaking or categories of institutions or undertakings approved by the Central Government in this behalf, of its, or their, obligations to any credit institution in respect of loans and advances made or other credit facilities provided to it, or them, by such credit institution, and

(ii) In making, as such agent, of payments in connection with such guarantee.]


Last updated on July, 2016

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