DICGC Settles Main Claim of PMC Bank: What Happens to Your Money When Banks Fail

Years ago, there have been many instances where the failure of banks led to depositors losing their money. This is where DICGC’s insurance steps in, with coverage that provides financial security and assurance to people. It restores depositor’s trust in the banking system and encourages them to invest with confidence. 

One such instance was the PMC Bank DICGC intervention, where Punjab and Maharashtra Cooperative Bank failed their depositors. Read on to learn more about DICGC and its role in helping secure depositors’ investments. 

What Is DICGC?

The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a wholly-owned subsidiary of the Reserve Bank of India (RBI). It was established in 1978 following a financial crisis caused by the failure of the Laxmi Bank and the subsequent collapse of the Palai Central Bank. DICGC aims to provide insurance coverage up to ₹5 lakh per depositor, including the principal and interest in the event of a bank failure. 

How Much Amount Is Insured by DICGC?

The DICGC insures a maximum amount of up to ₹5 lakh. This is based on both the principal or initial invested sum and the gained interest on it. For instance, if an individual originally invested ₹4,95,000 and their accrued interest was ₹4,000 for a year, then their DICGC insurance in total comes at ₹4,99,000. However, if the combined amount exceeds ₹5 lakh, the insurance cover remains capped at ₹5 lakh.

What Is the Settlement of PMC Bank?

On 22nd November 2021, the RBI introduced a draft scheme proposing the merger of the Punjab and Maharashtra Cooperative (PMC) Bank with Unity Small Finance Bank (SFB). As part of this merger, the PMC Bank DICGC claim process was efficiently managed to protect depositors. The scheme ensured that all depositors with funds exceeding ₹5 lakh would receive a full payout, spread over a period of 10 years. 

In such cases, when a bank fails and is merged, DICGC provides the insured amount to the transferee bank. As per the notification issued in September, the transferee bank (Unity SFB) must distribute the amount received from the DICGC to all eligible PMC Bank depositors within 90 days.

For individuals with more than ₹5 lakh deposits, it was announced that the additional payout will be made in phases. Over the next two years, up to ₹50,000 was paid, followed by an additional ₹1 lakh after three years. After four years, up to ₹3 lakh will be disbursed and up to ₹5.5 lakh after five years. Any remaining balance will be settled after 10 years. 

If you are one of the bank customers, you can now check the PMC bank DICGC claim status for updates on your payouts using Daava Soochak, a DICGC-launched online tracker. 

Checkout Banks Covered Under DICGC:https://stablemoney.in/blog/a-complete-guide-to-dicgc-insured-banks-list-deposit-protection/

It was also announced that starting from 31st March, 2021, any further interest on PMC Bank’s interest-bearing deposits would not be paid for a period of 5 years. However, after this period, retail deposits that remain outstanding will earn interest at a rate of 2.75% per annum.

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Deposit Insurance as a Safety Net Upon Bank Failure

The above instance of PMC Bank DICGC intervention is only one amongst many others where the RBI-owned corporation has played a crucial role in upholding the trust and assurance of depositors in the Indian banking system. The establishment of DICGC was done with the sole goal of protecting the rights of depositors and saving them from any failure of banks. 

How to Know Whether a Bank Has DICGC Coverage?

While it is mandatory for banks to have DICGC insurance coverage, there are still a few banks out there which do not have such coverage. There are two primary ways how you can check whether your bank has DICGC coverage:

• Visiting the Bank Portal

To check if your preferred bank is insured by DICGC, visit its official website for coverage details. If the information is not available online, ask a bank representative for confirmation.

• Navigating to the Official Site of DICGC 

This is another way you can check whether your bank provides DICGC insurance or not. For that, you need to head over to the official site of DICGC. Simply navigate to the ‘Depositors’ section, click on ‘List of Banks’ and then select ‘List of Insured Banks’. This will give you a complete list of all banks that are insured under DICGC. 

Final Word

DICGC continues to withhold their objectives of building depositors’ trust in the banking system by providing them insurance coverage that protects life savings. Apart from PMC Bank DICGC insurance coverage, there have been several instances where DICGC stepped in to help depositors recover their funds after bank failures.

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