Most of us would consider placing our savings in a fixed deposit in our bank and accumulate interest so that our savings grow and at a hard time in life provide us with the necessary cash whether for an emergency in life or for a planned happy occasion like marriage or study of your child or maybe support after your hard earned retirement.
There although is always a fear what happens if my bank goes bankrupt or some individuals mismanaged the funds that you so painstakingly saved. To protect the depositors from such misfortune and to keep the banking establishments a safe and public trusted place the government has created the THE DEPOSIT INSURANCE AND CREDIT GUARANTEE CORPORATION ACT, 1961 (amended up to September 2006).
This act is created to provide for the establishment of a government body to make insurance of deposits and to guarantee credit facilities and similar matters.
Which banks have the RBI insurance for your deposits?
As per the deposit insurance and credit guarantee corporation established by the government commercial banks and cooperative banks are both insured however primary cooperatives societies are not insured by this arrangement.
What deposits types are covered by the insurance?
All deposits such as savings, fixed, current, recurring, etc. Deposits except the following types of deposits:
What is the maximum deposit amount insured?
A maximum upto of ₹ 5,00,000 (Rs. Five lakhs) is insured for each depositor in a bank.
Who pays the cost of deposits insurance?
The insured bank is the one who bears the costs of the Deposit insurance premium.
What is the maximum amount of Insured deposits for one person if money is kept in different branches of a bank?
The deposits kept in different branches of a bank are pooled together for the purpose of insurance cover and a total of up to five lakhs rupees is considered.
Do you have to approach government directly to get your insured deposit money back?
No. In the event of a bank’s shuts down, an officer (liquidator) works on making depositor claim list and sends it to the DICGC (government body) for making assessment and make payment to you.
The DICGC pays the money to the liquidator who will pay the depositors. In the case of amalgamation / merger of banks, the amount due to each depositor is paid to the transferee bank.
Is only your principal deposit insured or the interest you eared also insured?
The bank is insured for depositor’s loss of principal as well as the interest earned upto a maximum amount of ₹ five lakhs.
This information is as provided by the RBI