Almost all banks in the country are covered under the Deposit Insurance and Credit Guarantee Corporation (DICGC). This includes public sector banks, private sector banks, small finance banks, and most cooperative banks.

When depositing money in a bank, most people wonder what will happen to their savings if the bank faces a crisis or closes down. The surprising fact is that many account holders are unaware that their deposits are automatically insured as soon as they open a bank account. This protection is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the Reserve Bank of India. So, let's tell you today how insurance is provided automatically when you open a bank account, a fact that many people don't know.

Which banks are covered under DICGC?

Almost all banks in the country are covered under the Deposit Insurance and Credit Guarantee Corporation. This includes public sector banks, private sector banks, small finance banks, regional rural banks, local area banks, and most cooperative banks. This means that if your account is in an RBI-licensed bank, it is generally covered under DICGC insurance.

Which deposits are insured?

The Deposit Insurance and Credit Guarantee Corporation provides insurance for almost all common types of deposits. This includes savings accounts, fixed deposits, recurring deposits, current accounts, and other similar deposits. However, deposits of central and state governments, deposits of foreign governments, inter-bank deposits, and some specific categories of deposits are not covered. According to DICGC rules, each account holder receives a maximum insurance cover of up to Rs. 5 lakh per bank. This amount includes both the principal and the interest earned on it. This means that if the total amount in all your accounts in a bank is Rs. 5 lakh or less, it is considered completely safe.

What happens if you have multiple accounts in one bank? If a person has multiple accounts in the same bank, such as a savings account, fixed deposit (FD), and recurring deposit (RD), the insurance cover is determined by adding the amounts in all the accounts. In this case, the maximum insurance coverage will be limited to ₹5 lakh, regardless of the number of accounts. However, if a person has accounts in two different banks, the ₹5 lakh insurance cover applies separately to each bank. This means that up to ₹5 lakh is insured in one bank and another ₹5 lakh in the other bank.

How is the money received if a bank faces a crisis?

If the RBI imposes a moratorium on a bank or the bank closes down, the DICGC (Deposit Insurance and Credit Guarantee Corporation) initiates the insurance process. In such cases, eligible account holders receive their insured amount within a stipulated time frame.