Most people keep their hard-earned money in the bank. By depositing lakhs of rupees in fixed deposits (FD) and savings accounts, people think that their money is safe.
But have you ever thought that if your bank sinks or goes bankrupt for some reason, what will happen to your money? Will you get your entire deposit back? This is a truth that most people are not aware of, and the banks themselves never give information about it. Know about it here.
According to RBI rules, if a bank sinks, you get a maximum guarantee of only Rs 5 lakh from the total amount deposited in your account. This guarantee is from the Deposit Insurance and Credit Guarantee Corporation (DICGC). That is, even if you have Rs 10 lakh or Rs 50 lakh deposited in your account, you will still get only Rs 5 lakh back. This Bank Deposit Guarantee includes both your principal and interest.
DICGC is a company of the Reserve Bank of India (RBI) which provides insurance cover to all banks. The bank pays the premium for this, the customer does not have to pay any money. Earlier this guarantee was only Rs 1 lakh, but in 2020 the government increased it to Rs 5 lakh. This rule applies to all commercial banks in the country, Indian branches of foreign banks, rural banks and cooperative banks.
This is the most important rule. If you have multiple accounts in different branches of the same bank (such as SBI) or have a savings account, current account and FD in the same bank, then all these will be considered as one account. In case of a bank sinking, you will get a maximum of Rs 5 lakh back by combining the total amount deposited in all your accounts. It is very important to know this to reduce Fixed Deposit Risk.
DICGC Insurance Limit is per person, per bank. This means that if your money is deposited in two different banks, you will get a guarantee of Rs 5 lakh each from both the banks. For example, if you have Rs 5 lakh in Bank A and Rs 5 lakh in Bank B and both banks collapse, then you will get back Rs 5 lakh each from both, i.e. a total of Rs 10 lakh.
Yes, the guarantee of Rs 5 lakh includes all your deposits. It includes savings account money, current account, fixed deposit (FD) and recurring deposit (RD). Even if the sum of all these is more than Rs 5 lakh, you will still get a maximum of Rs 5 lakh.
According to the rules, after the bank closes or collapses, DICGC has to return the money to the customers within 90 days. In this, the bank collects the information of the customers’ accounts for the first 45 days and in the next 45 days DICGC returns the money to the customers.
The best way to increase the security of your bank savings is that you do not keep more than Rs 5 lakh in one bank. If you have a lot of money, keep it separately in two or more banks.