The guarantee of securing deposits of up to Rs 5 lakh in banks is from the Deposit Insurance and Credit Guarantee Corporation.
Explain that DICGC is a subsidiary owned by the Reserve Bank of India, which provides insurance cover on bank deposits.
Do you know that you can increase the insurance cover to 5 lakhs and get a total cover up to 65 lakhs or more without spreading your deposits in different banks? Now the question arises that how can you get a cover of 65 lakh rupees or more in the same bank and same branch?
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DICGC Insurance cover available on these accountsThe insurance cover offered by DICGC works on deposits like savings accounts, FDs, current accounts, RD Azi. However, there are some deposits which are excluded such as deposits of foreign governments, central / state governments, state land development bank with state cooperative bank, inter bank deposits etc.
How does deposit insurance work?
According to the guidelines of the DICGC, every depositor in the bank is insured up to a maximum of Rs 5 lakh for the amount of principal and interest on the date of cancellation of the bank’s license or on the day of merger or reconstruction. This means that no matter how much money is deposited in the same bank by combining all your accounts, you will get an insurance cover of only Rs 5 lakh. This amount includes both principal and interest amount. If the bank fails, then your principal amount is 5 lakh rupees, then you will only get this amount back and not the interest.
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Extra insurance cover through accounts held in various rights
According to the guidelines of the DICGC, if you keep deposits in different rights and capacities in the same bank, then you will get a cover of Rs 5 lakh on each of your deposit amounts.