What it is
The Deposit Insurance and Credit Guarantee Corporation (DICGC) is the body that insures bank deposits in India. It operates under the DICGC Act, 1961. If an insured bank is in trouble, eligible depositors can claim their money from DICGC up to a fixed limit.
That limit is ₹5,00,000 per depositor, as stated in an RBI notice of 21 October 2026. The cover applies to deposits held “in the same capacity and in the same right”. The sources do not spell out what that phrase covers, so check the DICGC website (www.dicgc.org.in) before assuming how several accounts are counted. Our DICGC glossary page has a shorter definition.
How it works
Deposit insurance is a safety net. A bank keeps running as normal in most cases. The insurance matters only when RBI restricts a bank or the bank fails.
RBI’s notice on Puducherry Co-operative Urban Bank shows the steps in practice:
- RBI issues directions to the bank under Section 35A read with Section 56 of the Banking Regulation Act, 1949. You can read more in our explainer on that Act.
- The bank is barred from certain activities without RBI’s written approval, such as granting or renewing loans, making investments, and accepting fresh deposits.
- Withdrawals are capped. Here, the bank must allow no more than ₹5,000 from a savings, current or any other account of a depositor.
- Eligible depositors can receive their deposit insurance claim, up to ₹5,00,000, from DICGC. This is based on the depositor submitting willingness and after due verification.
Note that the cap on withdrawals and the insurance limit are different things. The ₹5,000 is what the bank itself may pay out under RBI’s restrictions. The ₹5,00,000 is the ceiling on what DICGC can pay for your deposits.
A worked example, with illustrative numbers: suppose a depositor has ₹3 lakh in one eligible account in the same capacity and right. Under the ₹5 lakh ceiling, the full ₹3 lakh falls within cover, subject to verification. If the balance were ₹7 lakh in the same capacity and right, the claim would be limited to ₹5 lakh.
Why it is in the news
On 19 October 2026 RBI issued directions to Puducherry Co-operative Urban Bank Ltd. They took effect from the close of business on 21 October 2026 and stay in force for six months, subject to review. RBI said the bank had not made concrete efforts to address supervisory concerns, and that depositor interest required the step. See our report on the withdrawal cap.
RBI also stressed that the directions should not by themselves be read as cancelling the bank’s banking licence. The bank continues to do banking business, within the restrictions, until its financial position improves.
Separately, RBI’s Central Board held its 625th meeting in Mumbai on 30 October 2026, chaired by Governor Sanjay Malhotra. It reviewed the activities of DICGC among other items. The release gives no further detail on what was discussed. See our coverage of the meeting.
What it means for you
If you hold deposits in a bank, it helps to know how much of your money is within the insured limit. The ceiling applies per depositor, in the same capacity and right, so the way your accounts are held can matter.
If your bank comes under RBI directions, expect two things based on this example: limits on how much you can withdraw, and a process to claim insurance on eligible deposits. The bank’s officials can give further information, and the DICGC website carries details.
Compare your balances with the ₹5,00,000 ceiling. You can use our FD calculator to see how a deposit grows over time, which helps you judge how much sits in one bank. This is not advice on where to keep money; it is a way to see your own exposure.
Also read about how RBI regulates banks for the wider supervision framework.
