INSURANCE OF BANK DEPOSITS :

An important feature of Indian banking is that deposits of the public with the banks are insured up to the limit of ‘ 1 lakh in each account. After the failure of the Laxmi Bank Limited and the Palai Central Bank Limited, scheduled banks of South India in 1960, the Government and the Reserve Bank felt the necessity of insuring the deposits in the banks so that public confidence in the banking institutions was not shaken whenever any bank failed to operate or was merged with another bank. The Deposit Insurance Corporation of India was established by an Act of Parliament to insure the deposits in the banks and the scheme of deposit insurance was introduced with effect from January 1, 1962. The Corporation was renamed as Deposit Insurance and Credit Guarantee Corporation with effect from July 15, 1978.