Which of the following statements is incorrect regarding lsquo deposit insurance rsquo in India ........

Economic Affairs Money Supply and Monetary Policy

Which of the following statements is incorrect regarding ‘deposit insurance’ in India?

A depositor has claim to a maximum of Rs 5 lakh per account as insurance cover.

The cover is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC).

DICGC is a fully owned subsidiary of Government of India.

The insurance covers deposits in commercial banks, regional rural banks (RRBs), local area banks (LABs), and cooperative banks.

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Explanation:

Currently, in the (unlikely) event of a bank going bust in India, a depositor has claim to a maximum of Rs 5 lakh per account as insurance cover — even if the deposit in their account far exceeds Rs 5 lakh. Depositors holding more than Rs 5 lakh in their account have no legal remedy in case of the collapse of the bank.

This amount is termed ‘deposit insurance’. The cover of Rs 5 lakh per depositor is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a fully owned subsidiary of the Reserve Bank of India.
The Rs 5 lakh-cover is for deposits in commercial banks, regional rural banks (RRBs), local area banks (LABs), and cooperative banks.