cheated by insurance provider

Your Bank’s Deposit is Insured to the tune of Rs.1,00,000/- by DICC

As per the law, all the banks in our country are registered with the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of Reserve Bank of India. It was established in 1961 under Deposit Insurance and Credit Guarantee Corporation Act, 1961 for the purpose of providing insurance of deposits and guaranteeing of credit facilities. DICGC insures all bank deposits, such as savings, fixed, current, recurring deposits for up to a limit of INR 1,00,000/- of deposit in each bank.

The functions of the DICGC are governed by the provisions of ‘The Deposit Insurance and Credit Guarantee Corporation Act, 1961’ (DICGC Act) and ‘The Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961’ framed by the Reserve Bank of India to exercise the power conferred by sub-section (3) of Section 50 of the Act. All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are insured by the DICGC.

Besides commercial banks, all the cooperative Banks of States, Central and Primary cooperative banks, are also called urban cooperative banks. They function in States/Union Territories which have amended the local Cooperative Societies Act. This empowers the Reserve Bank of India to order the Registrar of Cooperative Societies of the State/Union Territory to shut the operations of a cooperative bank. It can also supersede the management  committee asking the Registrar not to take any action regarding closure, amalgamation or reconstruction of a co-operative bank without prior approval in writing from RBI. At present all co-operative banks other than those from the State of Meghalaya and the Union Territories of Chandigarh, Lakshadweep and Dadra and Nagar Haveli are covered by the DICGC. Primary cooperative societies are not insured by the DICGC.

Insurance coverage: Earlier as per the provisions of Section 16(1) of the DICGC Act, the insurance cover was limited to INR 1500 for each person in the same capacity for all the branches a particular bank. However, the Act also empowers the Corporation to raise this limit with the prior approval of the Central Government. Accordingly, the insurance limit was enhanced from time to time. With effect from 1 May 1993, the limit has been extended of INR100000.

In the event of winding up or liquidation of an insured bank, every depositor of the bank is entitled to receive amount equal to his deposits in all the branches of that bank put together, standing as on the date of cancellation of registration (i.e. the date of cancellation of license or order of winding up or for liquidation) subject to the settlement off of his dues to the bank, if any (Section 16(1) and (3) of the DICGC Act). However, the payment to each depositor is subject to the limit of the insurance coverage fixed from time to time.

Under the provisions of Section 17(1) of the DICGC Act, the liquidating bank has to submit a list of people with the amount of their deposit to DICGC within three months. If the bank is merging with another bank, a similar list has to be submitted by the Chief Executive Officer of the Acquiring Bank within three months as per Section 18(1) of the DICGC Act.

The DICGC is required to pay back the deposits to each depositor within two months from when it receives the list of depositors. The time limit is however subject to all the information/documents being in order as required by the Corporation. For further details with regard to DICGC, readers may refer here.

The Vasantdada Shetkari Sahkari Bank, Maharashtra was ordered to shut down  because its banking license was cancelled by the Reserve Bank of India. There were several credit society’s depositors with over Rs.20 crore deposits filed their petitions before Hon’ble Bombay High Court for realization of their deposits.

A division bench of the Court, comprising Justice Abhay Oka and Justice Mahesh Sonak, while dismissing all petitions filed by credit societies exercised the rule of Rs.1 lakh which states – If a bank goes bust, its depositors will get up to maximum of Rs.1 lakh from the banking insurance system. The court further said that when a bank is ordered for closure, the Insurance indemnity scheme kicks in all depositors who have deposits of less than Rs.1 lakh and they are given the exact amount of their deposits, while all depositors who have more than Rs.1 lakh deposit will not get anything more than the limit.

If you are a depositor and need any help to get your deposit back within the limit of 1 lakh from the Banking Insurance Company, you may connect with our Award Winning Consumer Rights Adviser for free at

indian bank kyc norms

Know your Customer Norms of Bank & Validity of Aadhaar

In a recently issued circular, the Reserve Bank of India cleared its stand on the Know your Customer norms required to be adhered by every Bank  while opening an account for a customer. We have come across various news bytes as well as cases where a customer’s Aadhaar card was rejected as a valid proof. But that is not legally right.

A customer is required to submit a Proof of Identity (POI) and Proof of Address (POA) at the time of opening an account with a bank. According to the circular issued by RBI while a PAN Card testifies only as a Proof of Identity, an Aadhaar Card stands true for being both a POI as well as POA.  Here’s a small excerpt of the circular issued by RBI indicating its stand on acceptance of Aadhar as a valid POI and POA.

[su_pullquote][su_highlight]Acceptance of Aadhaar letter for KYC purposes – Unique Identification Authority of India (UIDAI) has advised Reserve Bank that banks are accepting Aadhaar letter issued by it as a proof of identity but not of address, for opening accounts. If the address provided by the account holder is the same as that on Aadhaar letter, it may be accepted as a proof of both identity and address. [/su_highlight][/su_pullquote] The entire circular can be accessed by clicking here. On non-acceptance of Aadhaar by a bank as a documentary POI and POA, the customer can bring it to the notice of the ‘Customer Service Section / Grievance Redressal Officer’ displayed in the branch premises, and also made available on their website. Only in cases where there is a change in the address of the customer from the one registered in Aadhaar, the customer needs provide a separate copy of the latest proof of address.

You have now been empowered with this fact by Power to Consumer. If you or any of your relative or friend or colleague is facing resistance from a bank official in accepting ‘Aadhaar’ as POI / POA, we are here to help you. Please feel free to pose your query on our website. Meanwhile, help us by spreading this piece of information in your social circles.

Image By Ali Rizvi, CC BY-SA 3.0,

indian bank service provider

Responsibilities of Banks as a Service Provider

On August 9th, 1969, a Presidential order made the then fourteen privately owned and operated Banks into Nationalised Banks under the Banking Companies (Acquisition & Transfer of Undertaking) Bill, 1969.

The main purpose behind nationalising banks was to develop the Indian economy, and also attain the following objectives:

  • Social Welfare : It was the need of the hour to direct the funds for the needy and required sectors of the Indian economy. Sectors such as agriculture, small and village industries were in need of funds for their expansion and further economic development
  • Abolishing Monopolies : Prior to nationalization, banks were controlled by private business houses and corporate families. It was necessary to check these monopolies in order to ensure a smooth supply of credit to socially desirable sections
  • Expansion of Banking Sector: In India the numbers of banks existing those days were certainly inadequate to serve the economy. It was necessary to spread banking across the country. This could be done only through expanding banking network (by opening new bank branches) in the un-banked areas
  • Reducing Regional Imbalance: In a country like India where we have a urban-rural divide, it was necessary for banks to go in the rural areas where the banking facilities were not available. In order to reduce this regional imbalance nationalization was justified
  • Priority Sector Lending : In India, the agriculture sector and its allied activities were the largest contributor to the national income. Thus these were labeled as the priority sectors. But unfortunately they were deprived of their due share in the credit. Nationalization was urgently needed for catering funds to them
  • Developing Banking Habits: In India more than 70% population used to stay in rural areas. It was necessary to develop the banking habit among such a large population

From this point onwards, all banks were required to play a role as ‘service provider’ to the account holders and treat them as ‘consumers’.

The Reserve Bank of India has issued a ‘Master Circular’ outlining many important aspects of customer services in Banks vide its Master Circular D. No. Leg.BC.21/09.07.006/2012-13 dated July 02, 2012 followed by RBI/2013-14/69 dated July 01,2013. This circular consolidates many important facets of customer service in banks such as opening/operation of deposit accounts; levy of service charges; service at the counters; operation of accounts by old and incapacitated persons and like. The link to the circular is attached below:

Power to Consumer stands by the side of consumers that are aggrieved with improper and irregular banking services. We believe that deficient customer service by any bank lies within the legal ambit of Consumer Protection Act, 1986 with its updated amendments. Any customer can file a complaint against any bank, and seek compensation as per the guidelines of the Consumer Court(s). 

So have you been a victim or sufferer of inefficient services by a bank? Let us know. Pose your complaint on our ‘Power to Consumer’ website today. And help us spread the word.

Image By Bill william compton at en.wikipedia, CC BY-SA 3.0,