DEPOSIT INSURANCE AND CREDIT GUARANTEE CORPORATION
The concept of securing deposits held with banks received attention for the first time in 1948 after the banking crises in Bengal. The issue was raised for reconsideration in 1949, but it was decided to hold it in suspense until the Reserve Bank of India made sure of adequate arrangements for the inspection of the banks. Subsequently, in 1950, the Rural Banking Research Committee also supported the concept. However, the Reserve Bank of India and the Central Government, after the collapse of the Central Bank of Palai, Ltd. and Laxmi Bank Ltd. in 1960, thought seriously about the concept. In Parliament on August 21, 1961. After it was passed by Parliament, the bill got the President's assent on December 7, 1961 and the Deposit Insurance Act of 1961 went into effect on January 1 Of 1962.
The deposit insurance system was initially extended to commercial banks operating only. This included the State Bank of India and its subsidiaries, other commercial banks and the branches of foreign banks operating in India.
Since 1968, with the enactment of the Deposit Insurance Corporation Amendment Act of 1968, the Corporation was required to register all "eligible cooperative banks" as insured banks under the provisions of Section 13A of the Act. A cooperative bank Eligible person means a cooperative bank (either a state cooperative bank, a central cooperative bank or a primary cooperative bank) in a State that has approved the enabling legislation that modifies its Co-Agreement, which requires the State Government to grant Powers to the Reserve Bank to order the Register of Cooperative Societies of a State to liquidate a cooperative bank or replace its Management Committee and require the Register not to take any action of liquidation, amalgamation or reconstruction of a cooperative bank without prior sanction In writing from the Reserve Bank of India.
In addition, the Government of India, in consultation with the Reserve Bank of India, introduced a new credit guarante scheme in July in the year 1960. The Reserve Bank of India was entrusted with administering the Plan as an agent of the Government Central Bank, of the Indian Reserve Bank Act of 1934 and was designated as a Credit Guarantee Organization (CGO) to ensure the progress made by banks and other credit institutions to the credit industries small scale. The Reserve Bank of India operated the scheme until March 31, 1981.
The Reserve Bank of India also promoted a public limited company on January 14, 1971, named the Credit Guaranty Corporation of India Ltd. (CGCI). The main objective of the Credit Guarantee Schemes, introduced by the Credit Guarantee Corporation of India Ltd., was to encourage commercial banks to meet the credit needs of hitherto neglected sectors, particularly the poorest sectors Through the guarantee of loans and guarantees granted by credit institutions to small and needy borrowers covered by the priority sector.
In order to integrate the functions of deposit insurance and credit guarantee, the two previous organizations (DIC and CGCI) were merged and the current Deposit Insurance and Credit Guarantee Corporation (DICGC) entered into force on July 15, 1978. Consequently, the Deposit Insurance Act of 1961 was changed to the 1961 Act on deposit insurance and credit guarantee.
As of April 1, 1981, the Corporation extended its guarantee backing to the credit extended to small-scale industries, also after the cancellation of the Indian Government's credit guarantee system. With effect from 1 April 1989, the coverage of the guarantee extended to all developments in the priority sector, as defined by the Reserve Bank of India. However, as of April 1, 1995, all housing loans have been excluded from the guarantee coverage by the Corporation.