Is my deposit protected? How to establish it before you hand over money

An agent has explained the scheme, the passbook looks official, and the institution has papers. The question worth answering before the first fifty rupees changes hands is narrower than "is this a good place to put money", and it has a checkable answer: if this institution stopped paying tomorrow, is there a statutory insurer standing behind my balance, and for how much?

This page answers that in the order the answer is actually built. It does not tell you where to put money, and it cannot tell you whether a particular institution is well run.

Four things that are not the same

Almost every mistake in this subject comes from treating these four as one. They are related, they usually run in this order, and none of them automatically produces the next.

1. Co-operative registration. The institution is registered as a co-operative society, by a Registrar of Co-operative Societies under state law, or by the Central Registrar if it operates across states. This is real and it is verifiable. It says nothing whatever about banking.

2. A banking licence, and the statutory category. The Banking Regulation Act, 1949 decides who is a bank. Its own definition is that a "co-operative bank" means "a state co-operative bank, a central co-operative bank and a primary co-operative bank", and the Reserve Bank licenses them under Sections 22 and 23 of that Act as applied to co-operative societies. A Primary Agricultural Credit Society is excluded from the Act altogether. The co-operative credit structure explains which institution sits where.

3. Regulation by the Reserve Bank. RBI "regulates the banking functions of StCBs/DCCBs/UCBs" under those sections. Supervision is not insurance. It is a set of rules about how the bank operates, not a promise about your balance.

4. Deposit insurance. The Deposit Insurance and Credit Guarantee Corporation insures deposits under its own Act, with its own eligibility test and its own registration. This is the only one of the four that puts a statutory insurer behind your money.

A reader who establishes only the first has established almost nothing about protection. That is the whole problem, and it is why a registration certificate produced at the door is not the answer to this question. Our bank or credit society guide works through the first two; this page carries on into the last two.

Where the chain can break

Being a co-operative bank is very nearly enough. The precision is worth having, because it explains what the cover actually depends on.

The DICGC Act, 1961 does not insure co-operative banks as such. It insures an "eligible co-operative bank", which Section 2(gg) defines as a co-operative bank "the law for the time being governing which provides that" its winding up, or a scheme of amalgamation or reconstruction, "may be made only with the previous sanction in writing of the Reserve Bank", that it shall be wound up if RBI so requires, and that its committee of management may be superseded on RBI's requirement.

Read that again for what it turns on: the state's co-operative law, not the individual bank's behaviour. DICGC puts the same test in its own words, describing cover for co-operative banks functioning in states and union territories "which have amended the local Cooperative Societies Act empowering the Reserve Bank of India (RBI) to order the Registrar" to wind up a co-operative bank or supersede its management.

And then it states the position today, which is the half a reader needs in order not to worry unnecessarily: "At present all co-operative banks are covered by the DICGC."

Both halves are true at once. Cover is not a property of the word "bank" on the signboard; it is the product of a statutory condition that is currently satisfied everywhere.

Registration is a live status. DICGC's registration of a bank "stands cancelled" if the bank is prohibited from taking fresh deposits, if its licence is cancelled or refused, if it is wound up, if it stops being a co-operative bank within the meaning of the Banking Regulation Act, if it transfers all its deposit liabilities, or if it is amalgamated under a scheme that does not permit fresh deposits. Where that happens, "deposits of the bank remain covered by the insurance till the date of the cancellation".

There is one case with a harder edge. For banks de-registered on other grounds, such as non-payment of premium or ceasing to be eligible co-operative banks under Section 2(gg), DICGC states that on their liquidation "the Corporation will have no liability". That is the reason the de-registered list, below, is worth a minute of anyone's time.

And the boundary this site returns to constantly, in DICGC's six words: "Primary cooperative societies are not insured by the DICGC."

What ₹5,00,000 actually means

"Insured up to ₹5 lakh" is repeated everywhere and is rarely stated precisely enough to use.

It is not a figure in the Act. Section 16(1) of the DICGC Act names one thousand five hundred rupees. A proviso lets the Corporation raise it with the Central Government's approval, and it has done so six times: ₹5,000 from 1 January 1968, ₹10,000 from 1 April 1970, ₹20,000 from 1 January 1976, ₹30,000 from 1 July 1980, ₹1,00,000 from 1 May 1993, and ₹5,00,000 with effect from 4 February 2020. Treat it as the current administered figure rather than a constant.

Principal and interest together. DICGC insures "principal and interest upto a maximum amount of ₹ 5 lakh". Its own worked example: ₹4,95,000 of principal plus ₹4,000 of accrued interest is ₹4,99,000 insured. Had the principal been ₹5,00,000, the interest would not be covered, "not because it was interest but because that was the amount over the insurance limit".

Per depositor, per bank, across every branch. Deposits kept in different branches of the same bank are added together and one limit applies. Deposits at different banks are counted separately, and DICGC confirms this holds even if both banks close on the same day.

Accounts in the same right and capacity are added together. Your savings account, your fixed deposit, your recurring deposit and your pigmy account at one bank are one pot against one limit. A pigmy account does not carry a limit of its own.

Genuinely different capacities are counted separately, each with its own limit: as a partner of a firm, as guardian of a minor, as a director, as a trustee, and joint accounts. Two details are easy to get wrong:

• A sole proprietorship's deposit is aggregated with the proprietor's individual deposit, not counted separately.
• For joint accounts, revised with effect from 26 April 2007, the order of names decides. The same people in the same order across several accounts is one capacity, aggregated. A different order, or a different group of people, is a different capacity with its own cover.

Set-off: what you owe is netted off

This is the qualification most often missed, and it bites hardest in this subject. DICGC states that "Banks have the right to set off their dues from the amount of deposits as on cut off date", and that "The deposit insurance is available after netting of such dues". If you hold a loan or overdraft against your collected balance, and 10 institutions in our directory publish exactly that facility, the insured figure is the net one rather than the number in the passbook.

The date is fixed by the event. The amount is worked out as at the date of liquidation, or of licence cancellation, or of the amalgamation scheme coming into force, or of the imposition of All Inclusive Directions.

Some deposits are excluded altogether: deposits of foreign governments, deposits of the Central or State Governments, inter-bank deposits, any amount due on a deposit received outside India, and any amount specifically exempted by the Corporation with RBI's prior approval. None of these is likely to describe a household pigmy account.

You are not charged for it. The premium is "borne entirely by the insured bank".

Working it out for your institution

If it is a co-operative bank

Establish three things rather than one: that it is a state, central or primary (urban) co-operative bank in the statutory sense; that it holds an RBI licence; and that it appears on DICGC's current insured-bank register. Of the institutions in our directory, 16 of 19 appeared in that register on the date we checked it.

If it is a credit co-operative society

Do not assume cover. A credit co-operative society, a patpedhi, a Souharda co-operative and a Nidhi company are not co-operative banks, and DICGC's exclusion of primary co-operative societies is explicit. What is worth establishing instead is what does stand behind the deposit: which law it is registered under, which Registrar supervises it, what its bye-laws say about repayment, and where a complaint would go if one were needed. Those are real answers; they are simply not deposit insurance.

If the status is unclear

Treat "unclear" as its own finding rather than as a verdict. Where we cannot establish cover for an institution from the sources we reviewed, we say exactly that, and this page recommends the reader do the same. Coverage could not be established from the sources reviewed is an honest statement. This institution is not insured is a claim about a named institution, and it needs evidence that an absence of information does not provide.

How to check it yourself

Five checks, none of which asks you to take Pigmity's word for anything:

1. Ask for the banking licence, not the registration certificate. They come from different authorities and mean different things. The is it a bank or a society checklist turns this into questions you can ask at a counter.
2. Search DICGC's List of Insured Banks for the institution's exact legal name.
3. Check DICGC's List of De-Registered Banks. This is the step almost nobody takes, and it is the one that distinguishes a bank that is insured from one that was.
4. Check DICGC's list of Banks Under All Inclusive Directions, which tells you whether withdrawal restrictions are already in force.
5. Cross-check against RBI's own lists of scheduled and non-scheduled urban co-operative banks, which do not depend on DICGC's register at all.

Pigmity is not a regulator, holds no register, and cannot confer or confirm cover. Our directory records what each institution published on a stated date, with the source, so it is a place to start rather than an authority to rely on.

What the cover does in each of the three events

Deposit insurance pays in three situations, and it works differently in each. The mechanics, the paperwork and the timetable are set out in what happens if your institution fails; this is only what a person deciding today needs to know.

• Liquidation. DICGC pays the liquidator, not you, within two months of receiving the claim list, and the liquidator disburses. DICGC does not deal directly with depositors of liquidated banks.
• Amalgamation or reconstruction. DICGC pays the transferee bank the shortfall between what the scheme credits you and the original amount or the insured limit, whichever is less. A merger is not, by itself, a loss event; when your bank merges covers what changes for a depositor.
• All Inclusive Directions. Since Section 18A came into force on 1 September 2021, cover is payable while the bank is still standing but withdrawals are restricted, within 90 days of the directions being imposed, and you must file a signed willingness form with the bank for your claim to be included. What directions are, and how they differ from a cancelled licence, is in what "under directions" means.

What deposit insurance does not do

It does not stop a bank failing; it pays out afterwards. It does not protect a balance above the limit, and it does not restore the interest you expected to earn. It is reduced by what you owe the same bank. It does not apply to a society at all, however the passbook is printed. And it says nothing about whether the scheme's own terms — the rate, the early-closure penalty, the agent's conduct — are any good, which is what the checklist before opening an account is for.

What Pigmity could not establish

• Whether a daily-collection balance is treated as an ordinary deposit in a claim. Nothing in the DICGC Act or its FAQs addresses daily-collection schemes. The Act defines a deposit as the aggregate of unpaid balances due to a depositor across all accounts, which on its face would include a credited pigmy balance, but we found no DICGC material confirming it in practice and we are not going to infer one.
• What happens to cash handed to an agent and not yet credited. No published statement resolves it. Uncredited cash is not obviously a balance in an account, which is why the receipt and the passbook entry are worth keeping.
• How long payment has actually taken at recent co-operative bank failures, measured against the 90-day statutory path.
• Whether any state's co-operative law currently fails the Section 2(gg) condition. DICGC says all co-operative banks are presently covered; we did not verify that state by state and do not claim to have.
• Whether every institution we list is registered today. Our dataset records the register position on the date each record was checked. That is a dated observation, not a live status, which is why check 2 above is yours to make rather than ours.