Bank deposits in India are protected by deposit insurance from the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly owned subsidiary of the Reserve Bank of India. If an insured bank fails, depositors get their money back up to a limit.
How much is covered
Since February 4, 2020, the cover is up to Rs 5 lakh per depositor per bank. Earlier, the limit was Rs 1 lakh. The Rs 5 lakh limit includes both principal and interest.
What deposits are covered
- Savings accounts
- Current accounts
- Fixed deposits
- Recurring deposits
What is not covered
- Deposits of foreign governments
- Deposits of central and state governments
- Inter bank deposits
- Deposits of state land development banks with state cooperative banks
- Amounts due on account of deposits received outside India
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Which banks are insured
All commercial banks, including branches of foreign banks in India, local area banks, regional rural banks, small finance banks and payments banks, are insured by DICGC. Cooperative banks are also covered. You can check the list of insured banks on the DICGC website. Every insured bank must display this information at its branches.
How the limit is applied
- The Rs 5 lakh limit is per depositor in one bank, across all branches.
- Deposits held in different capacities, such as an individual account and a joint account, or as a guardian or partner, are treated separately.
- Deposits in different banks are insured separately.
So if you have Rs 8 lakh in one bank in your own name, only Rs 5 lakh is insured. Spreading money across banks can increase protection.
Faster payout
The DICGC (Amendment) Act, 2021 introduced a 90 day timeline. If the RBI imposes restrictions such as a moratorium on a bank, depositors can get their insured amount within 90 days, without waiting for the bank to be liquidated.
Who pays the premium
The premium is paid by the bank, not the depositor.
Proposals to raise the limit
There have been discussions about raising the insurance limit further. Any change will be notified by the government and DICGC. Until then, the current limit stays at Rs 5 lakh.
Bottom line
Deposit insurance protects up to Rs 5 lakh per depositor per bank. Choose well regulated banks and spread large savings across banks to stay within the cover.
Source / स्रोत: Deposit Insurance and Credit Guarantee Corporation, Reserve Bank of India
