DICGC BANK was established on January 1, 1962. The need to insure deposits with banks arose for the first time in 1948 after the banking crisis in Bengal. The idea again came up for reconsideration in 1949, but it was decided to put it on hold until the Reserve of India. The bank does not ensure adequate arrangements for inspection of banks. After this, in the year 1950, the Rural Banking Inquiry Committee also supported this concept. However, serious consideration was given to this concept by the Reserve Bank of India and the Central Government in 1960 after the accident of Palai Central Bank Ltd. and Lakshmi Bank Ltd. The Deposit Insurance Corporation (DIC) Bill was introduced. This proposal was placed in the Parliament on 21 August 1961. After being passed by the Parliament, the Bill received the assent of the President on December 7, 1961 and the Deposit Insurance Act, 1961 came into force on January 1, 1962.
The deposit insurance scheme was initially introduced only for working commercial banks. This included the State Bank of India and its subsidiaries, other commercial banks and branches of foreign banks operating in India.
From 1968, with the enactment of the Deposit Insurance Corporation (Amendment) Act, 1968, the Corporation was required to register ‘qualified co-operative banks’ as insured banks under the provisions of section 13A of the Act.
The Government of India, in consultation with the Reserve Bank of India, introduced a credit guarantee scheme in July 1960. The administration of the scheme was entrusted to the Reserve Bank of India as an agent of the Central Government under Section 17. The Reserve Bank of India Act, 1934 and small scale industries were designated as Credit Guarantee Organizations (CGOs) to guarantee advances given by banks and other credit institutions. The Reserve Bank of India operated this scheme till March 31, 1981.
The Reserve Bank of India also promoted a public limited company named Credit Guarantee Corporation of India Limited (CGCI) on 14 January 1971. The main objective of the credit guarantee schemes launched by the Credit Guarantee Corporation of India Limited was to encourage commercial banks to meet the credit needs of hitherto neglected sectors, especially the weaker sections of the society falling under the non-priority sector. Industrial activities by providing guarantee cover to loans and advances given by credit institutions to small and needy borrowers.
With a view to integrate the functions of Deposit Insurance and Credit Guarantee, the above two organizations (DIC and CGCI) were merged and the present Deposit Insurance and Credit Guarantee Corporation (DICGC) came into existence on 15th July, 1978. Consequently, the title Deposit Insurance Act, 1961 was changed to ‘Deposit Insurance and Credit Guarantee Corporation Act, 1961’.
With effect from 1 April 1981, the Corporation extended its guarantee support for loans given to small scale industries also, after the cancellation of the Credit Guarantee Scheme of the Government of India. With effect from April 1, 1989, the guarantee cover was extended to the entire priority sector advances, as defined by the Reserve Bank of India. However, with effect from April 1, 1995, all housing loans have been kept out of the purview of guarantee cover by the Corporation.
To contribute to financial stability by securing public confidence in the banking system through provision of deposit insurance, particularly for the benefit of the small depositors.
To be recognized as one of the most efficient and effective deposit insurance providers, responsive to the needs of its stakeholders.