Deposit Insurance and Credit Guarantee Corporation (DICGC) is a wholly-owned subsidiary of the Reserve Bank of India (RBI). It provides deposit insurance that works as a protection cover for bank deposit holders when the

Deposit Insurance and Credit Guarantee Corporation (DICGC) is a wholly-owned subsidiary of the Reserve Bank of India (RBI). It provides deposit insurance that works as a protection cover for bank deposit holders when the bank fails to pay its depositors. 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 in exercise of the powers conferred by sub-section (3) of Section 50 of the said Act. The authorized capital of the Corporation is ₹50 crores, which is fully issued and subscribed by the Reserve Bank of India (RBI). 'The management of the Corporation vests with its Board of Directors, of which a Deputy Governor of the RBI is the Chairman. As per the DICGC Act, the Board shall consist of, besides the Chairman, (i) one Officer (normally in the rank of Executive Director) of the RBI, (ii) one Officer from the Central Government, (iii) five Directors nominated by the Central Government in consultation with the RBI, three of whom are persons having special knowledge of commercial banking, insurance, commerce, industry or finance and two of whom shall be persons having special knowledge of, or experience in cooperative banking or co-operative movement and none of the directors should be an employee of the Central Government, or the RBI or the Corporation or a director or an employee of a banking company or a co-operative bank, or otherwise actively connected with a banking company or a co-operative bank, and (iv) four Directors, nominated by the Central Government in consultation with the RBI, having special knowledge or practical experience in respect of accountancy, agriculture and rural economy, banking, co-operation, economics, finance, law or small scale industry or any other matter which may be considered to be useful to the Corporation. The Head Office of the Corporation is at Mumbai. An Executive Director is in overall charge of its day-to-day operations. It has four Departments, viz. Accounts, Deposit Insurance, Credit Guarantee and Administration, under the supervision of other Senior Officers. The Corporation had four branches, situated at Kolkata, Chennai, Nagpur and New Delhi. Out of these, the branches situated at Kolkata, Chennai and Nagpur were closed with effect from November 30, 2000, since almost all the banks have opted out of the Credit Guarantee Schemes, and most of the pending claims have been settled. While major items of work of these three branches were taken over by the Head Office of the Corporation, some residual items of work are vested with the DICGC Cells specially created in the Rural Planning & Credit Department of the Reserve Bank of India at the respective centres. The preamble of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 states that it is an Act to provide for the establishment of a corporation for the purpose of insurance of deposits and guaranteeing of credit facilities and for other matters connected therewith or incidental thereto. The Agency insures all kinds of deposit accounts of a bank, such as savings, current, recurring, and fixed deposits up to a limit of ₹5 lakh per account holder per bank. In case an individual's deposit amount exceeds ₹5 lakh in a single bank, only ₹5 lakh, including the principal and interest, will be paid by DICGC if the bank becomes bankrupt. DICGC protects depositors' money kept in all Commercial and Foreign Banks Located in India; Central, State, and Urban Co-operative Banks; Regional Rural Banks; and Local Banks, provided that the bank has opted for DICGC cover. The agency's operations are performed as per The Deposit Insurance and Credit Guarantee Corporation Act, 1961 and The Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961, framed by RBI under the provisions of sub-section (3) of Section 50 of the act. The act states that the establishment of this corporation is with the aim of insuring deposits guaranteeing credit facilities, and other related matters. The following account are not covered under DICGC : Deposits of state or Central governments. Deposits from Foreign Governments. State land development banks depositing with the state co-operative bank. Inter-bank deposits. Funds that are due on account of India and deposits received outside India. Funds exempted by the corporation with the previous approval from RBI. When banks register with DICGC, the agency grants a printed certificate to the bank that displays information regarding the protection offered by DICGC to depositors of the insured bank. On the basis of the above facts, answer the following questions : Can deposit insurance be increased by depositing funds into several different accounts all at the same bank? Who pays the cost of deposits insurance ? Whether the bank can deduct the amount of dues payable by the depositor ?