In today’s times, keeping money in a bank is considered the safest option for people. However, people often worry about what will happen to their savings if the bank faces a crisis or closes down. Many account holders are unaware that their deposits are automatically insured as soon as they open a bank account. In India, this protection is provided through the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the Reserve Bank of India. This institution works to protect customers’ deposits up to a certain limit in case of bank failure or closure.
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What is DICGC, and how does it work?
DICGC is a government institution that provides insurance for bank deposits. Under this scheme, almost all common types of deposits in banks are protected. Customers do not need to apply separately for this insurance, nor do they have to pay any fees. The insurance premium is entirely paid by the bank, and this scheme is mandatory for all insured banks.
Which banks are covered by DICGC insurance?
Almost all RBI-licensed banks in the country are covered under this insurance scheme. This includes public sector banks, private banks, regional rural banks, small finance banks, local area banks, and most cooperative banks. This scheme is mandatory, and no bank can opt out of it.
Which deposits are insured?
Under this scheme, most deposits, such as savings accounts, fixed deposits, recurring deposits, and current accounts, are protected. However, deposits of the central and state governments, foreign governments, and interbank deposits are not covered.
What is the maximum amount protected?
According to DICGC rules, an individual receives a maximum insurance cover of up to ₹5 lakh in a single bank. This includes both the principal amount and the interest earned on it. If the bank closes down, the amount up to this limit remains protected.
Rules for multiple accounts in one bank
If a person has multiple accounts in the same bank, such as a savings account, an FD, and an RD, the total insurance cover is determined by adding the amounts in all the accounts. This means that regardless of the number of accounts, the maximum insurance coverage remains limited to ₹5 lakh.
Benefits of keeping money in different banks
If a person has opened accounts in different banks, they receive separate insurance coverage of up to ₹5 lakh for each bank. To protect larger amounts, people distribute their money across multiple banks.
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How to get your money back if a bank fails
If a bank closes or is placed under moratorium, the insurance payout process begins. In such cases, the bank or the liquidator sends a list of claims to the DICGC (Deposit Insurance and Credit Guarantee Corporation), and the payment is made within a stipulated time. This payment is usually made within a short period after the claim is received.
Rohit P
My name is Rohit Pal, and I have been working in the field of journalism for the past five years. During this time, I have written on a variety of topics, including business, automobiles, technology, and politics. I have worked with several major organizations and am currently working with Timesbull.
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