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The Deposit Insurance and Credit Guarantee Corporation (DICGC) traces its origins to the financial crises of the early 1960s, specifically the failure of several banks, which led to the introduction of deposit insurance in India. The foundational entity, the Deposit Insurance Corporation (DIC), was established on January 1, 1962, under the Deposit Insurance Corporation Act, 1961, making India the second country in the world to adopt such a scheme after the United States. The DICGC, as it is currently known, was formed in 1978 through the merger of the DIC and the Credit Guarantee Corporation of India Ltd. (CGCI), with the aim of integrating both deposit insurance and credit guarantee functions. The Corporation is a wholly-owned subsidiary and specialized division of the Reserve Bank of India (RBI), placing it firmly under the jurisdiction of the Ministry of Finance, Government of India, and is thus a statutory, public-sector financial entity.

The DICGC occupies an essential and systemic position as a critical component of India's financial safety net. Its primary significance lies in mitigating systemic risk and fostering public confidence in the banking system by providing mandatory insurance coverage for all deposits—including savings, fixed, current, and recurring accounts—in almost all operational commercial, regional rural, and eligible cooperative banks. The current insurance limit stands at ₹5,00,000 (five lakh rupees) per depositor per bank, a ceiling which was significantly increased in 2020. By guaranteeing the safety of small-depositor funds, the DICGC plays a vital role in preventing panic withdrawals during bank failures, thereby ensuring the overall stability and long-term health of the Indian economy. The corporation discontinued its initial credit guarantee functions in 2003 to refocus exclusively on deposit protection.