If you think that every rupee deposited in a bank is completely safe, then think again. Even if your savings account is protected, there is a limit behind it—and this limit can be very important to you.
In 2020, the government made a major change for bank account holders, which is important for every depositor to know today. Only the amount deposited in the bank up to ₹5 lakh is considered fully safe. This means that if a bank ever collapses or becomes insolvent, there is no guarantee that the account holder will get back more than ₹5 lakh.
What is the limit of deposit insurance?
Finance Minister Nirmala Sitharaman had announced in Budget 2020 that the deposit insurance limit has been increased from ₹1 lakh to ₹5 lakh. This facility comes under DICGC (Deposit Insurance and Credit Guarantee Corporation), which guarantees the security of deposits in banks up to a certain limit. This insurance cover is applicable to all bank savings accounts, current accounts, FDs and RDs. But remember, this limit of ₹5 lakh is applicable on a per person per bank basis. Even if you have deposited a total of ₹ 10 lakh in separate accounts in the same bank, only ₹ 5 lakh will be protected in case of drowning.