Deposit Insurance (DICGC) – How far your fixed deposits are safe?

Deposit Insurance (DICGC) – How far my fixed deposits safe in IndiaDeposit Insurance (DICGC) – How far your fixed deposits are safe?


Almost all the individuals trust banks for their deposits in the form of Savings A/c, Current A/c, RD or FD as banks offer safety and guaranteed returns. But what happens if your bank goes bankrupt. Most of us are unaware of the fact that our deposits with the banks are also insured. Some think their 100% FDs are safe as these are insured by deposit insurance (through DICGC). What is this DICGC exactly and which bank deposits are insured under DICGC? Would your deposits are safe with banks?

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What is DICGC?

DICGC is the acronym for Deposit Insurance and Credit Guarantee Corporation (DICGC). Established on 15 July 1978, DICGC is a wholly-owned subsidiary of Reserve Bank of India to provide insurance of deposits and guarantee of credit facilities. DICGC insures all bank deposits like savings, fixed, current, and recurring deposit for up to the limit of Rs 5 lakh per bank.

Which banks are insured under DICGC?

DICGC covers all commercial and branches of foreign banks functioning in India, local area banks and regional rural banks. It also covers all central, state, and urban co-operative banks functioning in states or Union Territories.

Please note that the primary cooperative societies are not insured by the DICGC.

What is covered under DICGC?

DICGC covers all deposits made under savings A/c, current a/c, FD a/c and RD a/c, except the following:

1) Deposits of a foreign government

2) Deposits of Central or State Government

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3) Inter-bank Deposits

4) Any amount due on account of and deposit received outside India.

5) Any amount which has been specifically exempted by the corporation with the prior approval of the Reserve bank of India.

What is the maximum limit covered under DICGC?

Each depositor in a bank is insured up to a maximum of Rs. 500,000 which includes both principal and interest amount.

If I have multiple deposits in various banks, how DICGC would work?  

If you have deposited with more than one bank, the deposit insurance coverage limit is applied separately to the deposits in each bank.

Can I know online, whether my FD is covered in DICGC?

While registering the banks as insured banks, the DICGC provides them with printed leaflets for display, which gives information related to the protection afforded by the Corporation to the depositors of the insured banks. In case of any doubt, one can visit the website-www.dicgc.org.in to check online, whether his bank is covered with DICGC. The depositor can even make a specific inquiry from the bank officials in this regard.

Would DICGC cover interest on deposits?

DICGC would cover the principal along with the interest up to the sum of Rs. 500,000. Any amount over and above this amount will not be insured by the DICGC.

If I have multiple accounts in the same bank with various branches, whether my insurance cover would increase?

If an individual opens multiple deposit accounts in a bank in the same type of ownership (no matter how many branches they are), they are considered as a single account. Therefore, the balances of all the accounts from all the branches in the same ownership are aggregated and insurance cover is available up to Rs 5,00,000.

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But, if the same individual has opened one account or multiple accounts as a partner of the firm, or guardian or director of a company, then such accounts are all considered different accounts. Such deposit accounts will enjoy the insurance cover separately.

This has been explained with the help of a table below.

I have 3 banks and FDs in each bank, how does it work?

The funds held in different banks enjoy different insurance coverage limits. If the funds are in different types of ownership or are deposited in separate banks, they would be separately insured. All funds held in the same type of ownership at the same bank are added together before deposit insurance is determined.

Can the bank deduct any dues payable to it by the depositor?

Banks have the right to set off their dues from the amount of deposits. The deposit insurance is available after setting off such dues.

Do I need to pay anything for DICGC insurance?

The account holder or customer of the bank need not pay anything for the DICGC. The premium of the Deposit Insurance is borne entirely by the insured bank.

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If my bank goes bankrupt, what is the process to get a deposit insurance amount?

If any bank fails and goes into liquidation, a liquidator is appointed. The liquidator prepares a deposit-wise claim list and sends it to DICG for scrutiny and payment. The DICGC is responsible to pay to the liquidator the claim amounts up to Rs 5,00,000 for each depositor within two months from the date of receipt of claim list from the liquidator. The liquidator has to disburse the claim amount to each insured depositor, corresponding to the claim amount.

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Can the DICGC withdraw deposit insurance cover from any bank?

The Deposit Insurance Scheme is compulsory for all the banks and no bank can withdraw from it. If the bank fails to pay the premium for the three consecutive periods, the Corporation may cancel the registration of an insured bank. In such an event, DICGC withdraws its coverage from the bank for default in the premium of payment, and the public is notified through newspapers.

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Suresh KP

Deposit Insurance (DICGC) – How far your fixed deposits safe

Suresh KP

15 comments

  • lalit agarwal

    As informd if Mr x is 1st holder with mrs x being 2 holder having 4 lac fd + sb balance 50000/- and
    Mrs x 1st holder with Mr x 2 holder having 2 lac fd + sb balance 20000/- will both the account be treated seperately as per DIGC while settling the claim and what amount , please clarify

    • Hello Lalit, Pls refer point no.10 in DIGC guidelines. The deposit insurance would be computed based on individual capacity and individual right. In your case, since it is joint account, 1) Mr.x has Rs 2.25 Lakhs share (Rs 4.5L/2 members) where Mr.X is 1st holder and Rs 1.1L (Rs 2.2L/2) where Mr.Y is 1st holder and totalling to Rs 3.35L. Means, Mr X (in both accounts) deposits are insured upto Rs 3.35L . ii) Similarly for Mrs. X = Rs 3.35 Lakhs. Net summary is the computations would depend on the individual capacity and right.

  • Krishna Prasad Voonna

    Dear Suresh,

    Please provide a post for best pharma stocks

  • S. Bhattacharya

    If I hold 5 lakhs in allahabad bank and 5 lakhs in Indian bank am I insured separately 5 lacs for each bank (I.e. indian and allahabad) or only 5 lacks for both together? ( Question is in the context of bank mergers)

    • Hello Bhattacharya, This would depend on the legal entity. If bank merges with another bank, it is legally treated as one entity and the deposit insurance is applicable only Rs 5 Lakhs per bank. Allahabad bank is merged with Indian Bank in Mar-2020 and not existing as legal entity any more. You could see this in your bank statements too (if you hold allahabad bank FDs). Now your FDs might be only in Indian Bank (both of them) and Rs 5 Lakhs limit applies here.

  • LOVENISH CHANDEL

    Very nice information. What about money invested in Post office and Life Insurance Corporation. Is money invested in Post office and Life Insurance Corporation is safe and insured by any Guarantee Corporation.

    • Hello Lovenish,
      Investing in post office and LIC is 100% safe as both are owned by Govt.
      Regd LIC, you need to understand how the insurance-cum-investment plan works. There are ULIPs / money back plans / endowment plans where your investment would be reduced with several allocations + commissions to agents. These are known facts. However beyond this, money in LIC is safe.

  • Dawinder singh

    Very useful information…..thanks

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