Stories
DICGC Overcharging Commercial Banks: Is New Risk-Based Premium Enough?
M
Moneycontrol•21-09-2026, 12:50
DICGC Overcharging Commercial Banks: Is New Risk-Based Premium Enough?
- •India's deposit insurer, DICGC, has accumulated a significant surplus of ₹2,11,366 crore beyond its actuarial liability, raising questions about overcharging banks.
- •Commercial banks contribute 94.72% of premiums but account for only 1.36% of net claims, while cooperative banks contribute 5.28% of premiums and account for 98.64% of net claims.
- •Effective April 1, 2026, DICGC moved from a flat premium to a risk-based structure, categorizing banks from A (lowest risk) to D (highest risk) with differentiated rates.
- •Even with the new risk-based premiums and vintage incentives, commercial banks are still projected to pay double what their claims experience warrants, with an estimated overcharge of ₹6,000 crore persisting.
- •The article suggests further reforms are needed to reduce premiums for low-risk commercial banks to reflect their actual claims contribution, potentially freeing up ₹19,000 crore, and to avoid burdening depositors and borrowers with excessive costs.
Key Questions Answered
Effective April 1, 2026, DICGC replaced its flat 12-paise premium with a risk-based structure where banks are rated into four categories (A to D) and pay differentiated rates, with the 12-paise rate retained as a ceiling.
Commercial banks contribute 94.72% of total premiums collected but account for only 1.36% of net claims since the inception of deposit insurance in 1962.
The vintage incentive grants a 1% discount for every completed year a bank has existed without any record of restructuring or major distress, up to a maximum cap of 25% for banks with 25 or more years of clean history.
