Question

Under Section 18(3) of the DICGC Act, 1961, Ms. B, a

Q: Answer-Under Section 18(3) of the DICGC Act, 1961, Ms. B, a depositor, maintains a Fixed Deposit (FD) of ₹4...

Explanation Section 162 and 3 of the DICGC Act referenced in Section 183 framework explicitly provide For the purposes of this section, the amount of a deposit shall be determined after deducting therefrom any ascertained sum of money which the insured bank may be legally entitled to claim by way of set-off against the depositor in the same capacity and in the same right. The critical requirements are i the sum must be ascertained not disputed ii the bank must be legally entitled to claim set-off iii the set-off must be against deposits held in the same capacity and same right. In Ms. Bs case i the loan default amount of 1,20,000 is ascertained ii the loan agreement permits set-off iii both the deposit and loan are in Ms. Bs own capacity. Thus, the bank can legally set-off 1,20,000 against the 4,00,000 deposit, reducing the insurable amount to 2,80,000. This is a deduction before DICGC insurance payment is calculated, not after. Thus, option B correctly applies Section 183 and the related set-off provisions.

depositor, maintains a Fixed Deposit (FD) of ₹4,00,000 with Bank Z. Ms. B also has an unsecured personal loan outstanding with Bank Z with a balance of ₹1,20,000, on which she is currently in default by three months. The loan agreement explicitly permits the bank to set-off deposit amounts against loan dues. When Bank Z is placed under moratorium and subsequently ordered for liquidation, which of the following correctly determines Ms. B's insurance claim?

A Ms. B is entitled to the full ₹4,00,000 insurance cover because deposits cannot be set-off against loans under DICGC regulations; loans are separate legal obligations

B Ms. B is entitled to ₹2,80,000 (₹4,00,000 minus ₹1,20,000) because DICGC allows set-off of ascertained sums that the bank is legally entitled to claim against the depositor in the same capacity and right

C Ms. B is entitled to ₹4,00,000, but the bank can pursue independent legal action to recover the loan; DICGC insurance is separate from bank's recovery rights

D Ms. B is entitled to ₹3,00,000 because DICGC applies a mandatory 25% haircut on all insurance payments to fund future claims

E Ms. B is entitled to ₹4,00,000 because the loan is unsecured; set-offs apply only to secured loans against deposits

Practice Next

Under Section 18(3) of the DICGC Act, 1961, Ms. B, a

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