Cooperative banks continue to be the weak link in the country’s deposit insurance system. Since its inception and till March 2024, Deposit Insurance and Credit Guarantee Corporation (DICGC) has paid out Rs 16,326 crore to depositors. Of this, Rs 295.9 crore was for claims from 27 commercial banks, while Rs 10,670.4 crore went towards claims from 374 liquidated cooperative banks. Of the total insured banks, only 140 are commercial while 1,857 are cooperative. This makes them the largest number of deposit-taking institutions covered globally, second only to the US. The share of insured deposits to total deposits was highest for cooperative banks at 63.2%, followed by public sector banks at 48.9%, small finance banks at 41.6%, privatesector banks at 32.7%, and foreign banks at 5.0%. In 2023-24, DICGC received Rs 23,879 crore in premiums, with commercial banks contributing 94.4% and cooperative 5.6%. It collects a premium of 12 paise per Rs 100 of deposits from banks, building a fund to repay the depositors of failed banks up to Rs 5 lakh per individual.
