The Deposit Insurance and Credit Guarantee Corporation (DICGC) settled deposit insurance claims worth Rs 1,988 crore during 2025-26, with the entire amount relating to co-operative banks under liquidation, merger or All-Inclusive Directions (AID), according to its Annual Report for 2025-26.
Of the total claims settled, Rs 1,460 crore pertained to banks placed under AID, through interim payments to depositors under Section 18A of the DICGC Act, 1961. The remaining Rs 528 crore related to liquidated and merged co-operative banks. The Corporation reported no claims from commercial banks during the year.
The report also highlights the contribution of co-operative banks to the deposit insurance system. Premium collections from the sector increased by 6.7 per cent to Rs 1,507 crore in FY26, compared with Rs 1,412 crore in the previous financial year.
The increase reflects the sector’s continuing contribution to the Deposit Insurance Fund (DIF), which is primarily supported through insurance premiums collected from banks, investment income and recoveries of claims settled.
Meanwhile, 17 Urban Co-operative Banks (UCBs) were deregistered during the year, primarily reflecting consolidation through mergers. As of March 31, 2026, DICGC provided deposit insurance coverage to 1,950 banks, including 1,826 co-operative banks. The total number of insured banks reflects the Corporation’s extensive coverage across the country’s banking system.
A significant policy development for the sector is the introduction of the Risk-Based Premium (RBP) Framework, effective April 1, 2026, with the approval of the Reserve Bank of India (RBI). The new framework marks a shift from the earlier uniform premium structure to a system in which insurance charges are linked to the risk profile of individual banks.
Under the revised arrangement, co-operative banks are assessed through the Tier 2 model, based on quantitative parameters drawn from the CAMELS framework and the potential loss to the Deposit Insurance Fund in the event of a bank failure.
The framework provides differential premium rates of 8, 10, 11 and 12 paise per Rs 100 of assessable deposits for risk categories A, B, C and D, respectively, against the earlier flat rate of 12 paise. It also provides vintage-based incentives of up to 25 per cent, subject to specified conditions, recognising banks with a longer record of contributing to the insurance fund without claim payouts.
The revised system is expected to encourage co-operative banks to strengthen their financial position, improve risk management practices and maintain sound banking operations.
