Bank FDs-Is your Bank have Deposit Insurance and Credit Guarantee(DICGC)?

In India, each person has at least few thousand rupees as an investment in Bank FDs. Because this is treated as safe haven of investment throughout history. But have you ever thought about what will happen if your Bank becomes bankrupt? Who will pay you back and how much you get?

To protect depositors, RBI came up with an insurance and credit guarantee facility. Which is called as DICGC-Deposit Insurance and Credit Guarantee Corporation. It protects the depositors in the case when banks bankrupt. So, we will look into the features of this investor-friendly facility.

1) Banks covered under this facility-Commercial Banks: All commercial banks including branches of foreign banks functioning in India, local area banks, and regional rural banks are insured by the DICGC.

Cooperative Banks: All State, Central, and Primary cooperative banks, also called urban cooperative banks, functioning in States or Union Territories are covered under the Deposit Insurance System. At present all co-operative banks other than those from the States of Meghalaya, and the Union Territories of Chandigarh, Lakshadweep and Dadra, and Nagar Haveli are covered under the deposit insurance system of DICGC.

Primary cooperative societies are not insured by the DICGC

2) What does DICGC covers?

In the event of a bank failure, DICGC protects bank deposits that are payable in India.
The DICGC insures all deposits such as savings, fixed, current, recurring, etc. except the following types of deposits.
(i)  Deposits of foreign Governments;
(ii) Deposits of Central/State Governments;
(iii)Inter-bank deposits;
(iv) Deposits of the State Land Development Banks with the State co-operative bank;
(v) Any amount due on account of any deposit received outside India
(vi) Any amount, which has been specifically exempted by the corporation with the previous approval of the Reserve Bank of India.

3) Maximum amount Insured-Each depositor in a bank is insured upto a maximum of Rs.5,00,000 (Earlier it was Rs.1,00,000) for both principal and interest amount held by him in the same capacity and same right as on the date of liquidation/cancellation of bank’s license or the date on which the scheme of amalgamation/merger/reconstruction comes into force.

4) How to know whether my bank is insured by the DICGC or not?

The DICGC while registering the banks as insured banks furnish them with printed leaflets for display giving information relating to the protection afforded by the Corporation to the depositors of the insured banks. In case of doubt, depositors should make a specific inquiry from the branch office in this regard.

5) Who will pay the cost of this insurance?

Banks will pay this cost. Hence investors do not need to worry.

Now we will look at how we can get the maximum benefit from this facility.

1) Don’t put all your money in the same Bank. As the maximum cover is Rs.5,00,000 including the money you kept in the branches of the same bank. Hence it is better to diversify it.

2) Maximum Insurance cover includes both Principal and Interest. Hence it is better to check out how much is your balance in each Bank.

3) Suppose your deposit crosses the maximum insurance cover then instead of holding it on a single make it joint holding. Example-If you want to park Rs.10,00,000 in a single bank then better hold Rs.5,00,000 in your name and the remaining Rs.5,00,000 in a joint account mode either with your wife or parents.

Single holding (As per RBI)-If an individual opens more than one deposit account in one or more branches of a bank, e.g. Shri S. K. Pandit opens one or more savings/current accounts and one or more fixed/recurring deposit accounts, etc., all these are considered as accounts held in the same capacity and in the same right. Therefore, the balances in all these accounts are aggregated and maximum insurance cover is available up to rupees one lakh.

Separate holding (As per RBI)-If more than one deposit account (Savings, Current, Recurring, or Fixed deposit) are jointly held by individuals in one or more branches of a Bank say three individuals A, B & C hold more than one joint deposit accounts in which their names appear in the same order then all these accounts are considered as held in the same capacity and in the same right. Accordingly, balances held in all these accounts will be aggregated for the purpose of determining the insured amount within the limit of Rs.1 lakh.

However, if individuals open more than one joint accounts in which their names are not in the same order for example, A, B, and C; C, B, and A; C, A, and B; A, C, and B; or group of persons are different say A, B and C and A, B, and D, etc. then, the deposits held in this joint accounts are considered as held in the different capacity and different right. Accordingly, insurance cover will be available separately up to rupees one lakh to every such joint account where the names appear in a different order or names are different.

So by knowing about the features of this facility you can sigh of relief about your deposits or money you have in your Bank accounts. Happy Saving!!

15 Responses

  1. Sir i have opened one single savings account and got 3 fd from it in the names of me & mother, me & wife, me & brother 1lac each fd. Are these fd seperately insured or not pl rply.

      1. Sir actually I wanted to confirm the example given at the site of dicgc where it is mentioned that if indivuals open 2 or more deposit accounts in same bank with different combination of name as A,B,&C or B,C,&A or C,B,&A or A,C,&B or with different people as A,B,&D then also all accounts are seperately insured. Here they have not emphasised that primary holder name shud b different. Under this example can we have multiple fixed deposits with such combination in same bank.

  2. Hi,

    Is there any way to check if a particular bank is registered under this scheme or not ?

    Like a website or something ?

    I want to check if a co-operative bank providing more interest rates is covered or not like TJSB.


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