Question

Under Section 18(3) of the DICGC Act, 1961, Ms. B, a depositor, maintains a Fixed Deposit (F

  • D 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
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