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Deposit Insurance coverage – What occurs in case your financial institution fails?


Deposit insurance coverage got here again to limelight after the Silicon Valley Financial institution or SVB disaster within the USA. Given the worldwide nature of the financial system, individuals in India too began to ask if the banks can have an issue and are they coated by Deposit Insurance coverage.

In any case, not alongside in the past we had failing banks such because the Lakshmi Vilas Financial institution, Punjab and Maharashtra Financial institution, to not overlook the scare with Sure Financial institution.

Now, presently there aren’t any troubled banks, however what occurs in case your financial institution goes underneath. What occurs to the cash you’ve within the financial institution?

An important factor that that you must know is that each one financial institution deposits are insured with the DICGC or the Deposit Insurance coverage and Credit score Assure Company of India.

However there are specific issues that that you must learn about this protection and eligibility.

Listed below are a number of FAQs that may assist you to perceive this layer insurance coverage higher. All FAQs are taken from this hyperlink on the DICGC web site.

What does the DICGC insure?

The DICGC insures all deposits comparable to financial savings, fastened, present, recurring, and so on. deposits of most business banks, international banks, native space banks and regional rural banks. At current all co-operative banks are additionally coated. 

Main cooperative societies aren’t insured by the DICGC.

What’s the most deposit quantity insured?

Every depositor in a financial institution is insured upto a most of5,00,000 (Rupees 5 Lakhs) for each principal and curiosity quantity held by him / her.

Nevertheless, this restrict is relevant on each possession sort. For instance, you probably have a single holding financial savings account and one other joint holding financial savings account, then the Rs. 5 lakh restrict shall be relevant to each accounts individually, even in the identical financial institution.

Additional, you probably have a present account with the financial institution, additionally it is coated individually for the Rs. 5 lakh insurance coverage.

Let’s say you’ve Rs. 5.5 lakh in you private financial savings account (single holding), Rs. 3 lakh within the joint holding account and Rs. 10 lakh within the present account, then in case of financial institution default, that is how deposit insurance coverage will work.

Account Kind Precise
Deposit Quantity
Recoverable from
Deposit Insurance coverage
Single Holding Financial savings ₹ 5,50,000 ₹ 5,00,000
Joint Holding Financial savings ₹ 3,00,000 ₹ 3,00,000
Present Account ₹ 10,00,000 ₹ 5,00,000
All accounts in the identical financial institution

The insurance coverage pays you Rs. 5 lakhs (max) for the one holding account, Rs. 3 lakhs for the joint holding account and Rs. 5 lakhs (max) for the present account.

If I’ve cash in numerous branches of the financial institution, how a lot insurance coverage is relevant to me?

Throughout branches of the identical financial institution, the quantity is totaled and most Rs. 5 lakh deposit insurance coverage is relevant to your account.

What if I’ve cash in numerous banks?

For every financial institution, you should have a separate Rs. 5 lakh insurance coverage restrict relevant. This is applicable even you probably have a single account holding in every of the banks.

How one can know if my financial institution is insured by the DICGC or not?

Easy, examine with the financial institution. Whereas most banks are coated, it’s good to search out out if the protection is energetic.

Can I improve my deposit insurance coverage with the financial institution and improve it to say Rs. 10 lakhs per account sort?

That is presently not potential. You’ll be able to open completely different account varieties or accounts with completely different banks to get the next cowl general.

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