1. Few readers of my earlier articles on the subject of DICGC called me and informed me that contrary to the applicable provisions some banks are not entertaining multiple willingness letters and papers/documents from the depositors that satisfy 'same capacity and in the same right' criteria. e.g Depositor 'A' has three deposits with the insured bank (currently under notified banks to receive the claims) Rs.5.00 each (i),(ii)(iii) held as under:

  • Held in a single name of 'A', (ii) in joint names of 'A' and 'B' (iii) in joint names of 'A', 'B' and 'C' (mode of payment not relevant). The concerned insured bank officials told customer 'A' that against these three deposits one/first depositor 'A' is common hence only one claim will be preferred/processed. Thus the person eligible will not be able to lodge 3 claims each of Rs.5 lacs. This is due to a lack of proper knowledge of the term 'same capacity and in the same right' on the part of the bank concerned.

2. Fast track processing the claim received from eligible depositor customers of 20-21 banks (that are under section 35A directions of Reserve Bank of India) and notified by DICGC (in the first batch), within the short period prescribed, is a herculean task unless the process is made uniform and simplified.

3. If one adds, KYC/Re-KYC dimension and focuses on it (submitting official valid documents such as Identity Proof, Address Proof, and Photo, etc to the bank separately for each claim), submission of claims would be 'dead slow'. Some customers may have deposits with such a bank held on different names combination/s. In each case rule of 'same capacity and the same right' would need to be applied. Some banks are unmindful and are insisting that each case should be accompanied by a separate KYC set (even in cases where the customer's KYC is not due for review).

Lodgement of depositors claims with DICGC - Issues - Need of process simplification without sacrificing safety and security

4. Many customers lost touch with their otherwise defunct bank (for many years and have not done the Re-KYC with it). Some customers may be handicapped, bed-ridden or sick, currently out of country/place of communication range and thus would not be able to provide, in time the required papers, photo, etc, give the willingness consent letter to the bank, cancelled cheque with name pre-printed on the cheque for the insured bank to submit claims on their behalf. Thus, very few claims would get lodged with the DICGC and the real object would get defeated. Many eligible persons will be deprived of the proposed benefit. Many such banks are running with a skeleton staff and paucity of time will kill the rest of enthusiasm.

5. Some banks are insisting depositor customers submit a 'cancelled cheque' to demonstrate that the account for given IFSC is given stands with the bank concerned, on the name of the claimant customer/customers.

6. Since there are 20 odd banks currently busy with collecting the documents and will be submitting claims to a single entity DICGC (after receiving the willingness/consent from their depositors) there is a need to standardize papers. Each bank is seeking something different. Some banks ask for full KYC/Re-KYC + xerox of deposit documents like passbook, FD receipt front and backside, and so on. All this will pile up many papers at the banks' end and neither DICGC nor a bank like PMC Bank (who has many customers) would be able to process the papers within a short time frame prescribed. Earlier there used to be audit verification, in detail before the settlement of claims. Process used to take years.


7. There is an urgent need to clarify the filling of certain vital columns like 'the amount'. There is utter confusion among banks as to which amount needs to be filled in. There is a need to revisit and provide absolute clarity on many aspects.

8. Under the circumstances to give true relief of the scheme to gullible depositors as per amended Section 18A of the DICGC Amendment Act, I have, among others, suggested DICGC the following:


Customers who have done KYC with any bank/FI/SEBI regulated entity in the recent past can/may obtain a CKYC number from that bank/FI and the same can be stated/submitted in place of KYC papers. In such cases asking seeking KYC papers (OVDs) should be not insisted upon as it will add to unnecessary paperwork.

DICGC/insured Bank can peruse the customer details based on the 14 digit KRA number provided by the CKYC registry (CKYCR). Under the circumstances seeking and collating KYC, papers are uncalled for and are a colossal national waste of stationery, time, and money defeats the purpose of Govt's setting up CKYC mechanism (RBI is part of this CKYC exercise and in complete sync with it).

DICGC has not made compulsory submission of KYC papers at the time of according willingness (consent) letter for claiming DICGC claims (lodging the claims) as can be noticed from the use of words: “already submitted/will be submitted”. Since the KYC papers need not be sent to DICGC, insisting submission of such papers by the bank concerned at the time of accepting claim willingness letter, for each account combination is superfluous/ absurd.

9. I hope DICGC would be preferring the payment of claim amounts directly to the depositors through electronic payment methods such as 'bulk NEFTs' to a claimant's bank (other than an insured bank in subject). For NEFT it is essential that the customer correctly provides IFSC, Account number, Bank, and Branch Name. However, chances of mistake or fraud of crediting to account of an unconnected person, siphon of funds, and/or money laundering cannot be prevented (there is no check on the account holder's name in NEFT/RTGS or IMPS). This is a basic defect in the current remittance mechanism that RBI is yet to resolve. RBI has 'smartly' pushed the ownership of this 'core issue' to the remitter by obtaining an undertaking from the remitter that the remitter knows and agrees that the remittance will be based on account number alone and there will be no check on the name of the remitter (stated in the remittance request/application). Accordingly, banks too have played safe, built-in security checks without the scrutiny of the name using appropriate disclaimers.

10. To get the benefit of maximum DICGC coverage from any given bank of a cover for each such deposit 'in same capacity and the same right', many people like me have placed deposits on different 'name combinations' within family members and that such deposits could have been made payable to:

Any One', 'Either or Survivor', 'Any One or Survivor', Jointly.

In many cases, no corresponding bank account/s would exist (in the banking system, outside the Insured Bank) or even with the insured bank concerned. Opening of many accounts with such combinations for preferring claim (submitting the copy of personalized cheque as a proof of account holders names would not be possible in the period prescribed, personalized cheques may not bear all such names, even bank passbooks may not bear all names). As a result, many customers would not be able to provide data of alternate bank account details, to satisfy the insured bank/DICGC. Hence, their claims would not be submitted/considered/processed. Thus, many deserving beneficiaries/ claimants would be left out.

To overcome this I had suggested DICGC may permit insured banks to prefer claim on behalf of depositors along with a consent letter that could be obtained from joint account holders authorizing anyone of them/first named to receive the claim amount and furnish required e-data of authorized such person. Copy of canceled cheque of 'such one person' can be attached to facilitate e-payment (if NEFT is the only mode chosen for claims pay-out).

In my view, the main object behind seeking 'KYC' and 'cancelled cheque' gets defeated if NEFT mode is chosen to settle the claim preferred. RBI is encouraging e-payments mode (NEFT/RTGS/IMPS/UPI etc). However, DICGC, Exchequer, and RBI should be mindful of the above-mentioned limitation (absence of account's name check) and that all depositor/claimant customers may not be able to submit personalized cheques or passbooks (with all names printed on them visible) as a prima facie proof.

One must understand that opening sets of CASA account with other bank/s in the same order /combination(s) and /or sequence(s) account, get checkbook/s with printed names on leaves, and submitting the copy of such personalized cheque to demonstrate it as proof of account holders/claimants' names (for a given account number and IFSC code to facilitate NEFT payout by DICGC), within the time frame prescribed, is also not feasible/possible.

Under the circumstances, I have suggested (and have attached) consent authorization, (to be obtained for each joint claim) signed by all the joint depositors, requesting DICGC and/or ____ insured Bank to settle the admissible amount of claim (if preferred through the insured bank) by making payment to the first-named joint account holder[to be in sync with IT rules (TDS 194A, etc )] in respect of each such deposit.

To ease substantial pressure on the otherwise squeezed machinery, accounting segments, at the same time not sacrificing the dutiful objective, I feel the method of seeking authorization in favor of the first-named depositor would be the most appropriate.

Under the circumstances, the best option to get a valid discharge, ensure proper payment, and prevent money laundering, etc settlement of the claim can be made by way of account payee cheque fvg such single authorized person. No doubt it will delay the process of encashment to 5-6 days and the additional cost of postage. In the case of claims of legal persons/corporates, such a situation would not arise. Settlement through an 'account payee crossed cheque' will have added advantage.

DICGC may seek/obtain a receipt from each such authorized person while parting the cheque. This will serve as proof for the proper discharge of DICGC's liability.

To avoid the chances of many left-outs, while meeting strict timelines concerned, I had suggested that such insured banks be advised/permitted by RBI to set up a special helpdesk involving additional/outsourced manpower as a special case.


Format of authorization (to be signed by all joint depositors) can be on these lines

From: Principal Depositor Jt Depositor-1 Jt Depositor-2 Jt Depositor-3

Concerning the following FD/s/CASA for which the claim is being preferred by the CEO of the bank DICGC

CASA/FD Account No

Names of Jt Depositors

Last Renewed amount

Int rate

Due Date



We hereby unconditionally agree and authorize PMC Bank to claim and receive the eligible amount in respect of the above deposit jointly held by us to the first name depositor Mr/Mrs _________________, singly.

His/Her Bank account details are under:

IFSC Code: ___________________ Account No: ____________________
Bank: _____________________ Branch:____________________

All joint depositor/s of above deposit namely:

Mr/Mrs _________________,
Mr/Mrs _________________,
Mr/Mrs _________________,

Confirm that this is authority coupled with interest as such irrevocable under the Indian Contract Act. Such payment made by bank/DICGC will be tantamount to your payment to all of us against the claim so submitted on behalf of all of us.

Please acknowledge the receipt and do the needful soon.

Thank you.

Principal Depositor
Jt Depositor-1
Jt Depositor-2
Jt Depositor-3

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Published by

Shivaprasad Laxman Chhatre
(Ex Chief Ethics and Compliance BNP Paribas)
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