BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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protect the interest of small depositors
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protect the bank to fail
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protect the large corporate from going bankrupt
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All of the above
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Detailed explanation-1: -It provides deposit insurance that works as a protection cover for bank deposit holders when the bank fails to pay its depositors. The agency insures all kinds of deposit accounts of a bank, such as savings, current, recurring, and fixed deposits up to a limit of Rs. 5 lakh per account holder per bank.
Detailed explanation-2: -Preamble to the DICGC Act, 1961 spells out the purpose of establishment of the Corporation as “Insurance of deposits and guaranteeing of credit facilities and other matters concerned therewith or incidental thereto”.
Detailed explanation-3: -The role of deposit insurance is to stabilize the financial system in the event of bank failures by assuring depositors they will have immediate access to their insured funds even if their bank fails, thereby reducing their incentive to make a “run” on the bank.
Detailed explanation-4: -The DICGC insures principal and interest upto a maximum amount of five lakhs.
Detailed explanation-5: -AU Small Finance Bank is a schedule commercial bank and deposits of customer with AU Small Finance Bank are covered under the insurance scheme provided by Deposit Insurance and Credit Guarantee Corporation (DICGC).