Have you ever wondered how much money you will get back if the bank in which you have kept all your money in FD goes bankrupt? Most people consider FD to be completely safe, but the truth is a little different.
How safe is your money in FD?
Insurance on bank deposits in India is provided by the Deposit Insurance and Credit Guarantee Corporation. This insurance covers only up to ₹ 5 lakh. This includes savings account, current account, FD and RD—all. That means if your total money in a single bank is ₹ 12 lakh, then only ₹ 5 lakh is safe. There is risk on the remaining ₹7 lakh.
Keeping multiple FDs in the same bank does not increase security
Many people think that breaking ₹10 lakh into 5 FDs will reduce the risk. but it’s not like that. Be it one FD or several, if all are in the same bank, the total insurance will be only ₹ 5 lakh. That means the risk remains the same.
The easiest way to reduce risk
The best way is to divide your money among different banks. Suppose you have ₹ 15 lakh, then you should deposit ₹ 5 lakh in Bank A, ₹ 5 lakh in Bank B and ₹ 5 lakh in Bank C, so that your entire money will be covered under insurance.
How can you increase security through joint account?
DICGC cover is available according to every person. i.e
- ₹5 lakh in the name of one person
- ₹5 lakh in the name of spouse
- Separate ₹5 lakh in joint account
In this way, you can save more money in a smart way even in the same bank.
Benefits of different capacities
If you maintain accounts in different roles (like individual, joint, trustee etc.), then you can get a separate cover of ₹ 5 lakh for each. But this is not applicable in every case, so it is important to plan wisely.
Are all banks equally safe?
Small finance banks offer higher interest, but the risk in them is slightly higher. Therefore, it is not right to keep more than ₹5 lakh in such banks. Big banks like State Bank of India, HDFC Bank and ICICI Bank are considered more reliable, but still it is not right to keep all the money in one bank.
What to do for those with big money?
If you have more money, do not depend only on FD. Also invest some money in government bonds or high-quality investments. This will further reduce your risk. FD is definitely safe, but not completely. The risk increases if more than ₹5 lakh is kept in a single bank. Therefore, it is wise to keep the money divided among different banks and accounts. Only then will your hard-earned money be truly safe.