When it comes to our hard-earned money, it's only natural to have concerns about its safety. One common question that often arises is whether the funds in our bank accounts are insured against unforeseen circumstances. In this article, we will provide you with valuable information on how to check if your money is insured and protected in the Indian context. Understanding the deposit insurance system in India will help you gain confidence in the security of your savings.
In India, the
Deposit Insurance and Credit Guarantee Corporation (DICGC) is responsible for
providing deposit insurance coverage to banks. It is a wholly-owned subsidiary
of the Reserve Bank of India (RBI). DICGC provides insurance coverage of up to
₹5 lakh per depositor, including both the principal
and interest amounts held across different accounts in the same bank. This
means that if you have multiple accounts
in the same bank, the total coverage amount will be up to ₹5 lakh.
Photo by Jason Dent on Unsplash
To verify if
your bank is insured, visit the DICGC website here. This list
is regularly updated and will confirm if your bank is covered by DICGC's
deposit insurance scheme.
If you have
funds deposited in several different accounts within the same bank, all funds
held in the same type of ownership will be added together before deposit
insurance is determined. However, if the funds are in different types of
ownership or deposited into separate
banks, they would be separately insured.
If you have deposits with more than one bank, deposit
insurance coverage is applied separately to the deposits in each bank. This
means that funds held in different banks are insured separately. In the event
that two different banks close on the same day, your funds from each bank would
be insured separately, regardless of the closure date.
Remember that deposits
held in the same capacity and same right refer to multiple accounts opened by
an individual, such as savings, current, fixed, or recurring deposit accounts
within one or more branches of a bank. These accounts are considered
collectively, and the insurance cover is available up to ₹5 lakh.
Here's a simple
example in table format to illustrate the concept:
| Account Type | Bank Branch | Account Balance (in INR) |
|---|---|---|
| Savings | Branch A | 200,000 |
| Current | Branch B | 300,000 |
| Fixed Deposit | Branch A | 400,000 |
| Recurring Deposit | Branch C | 100,000 |
| Savings | Branch C | 150,000 |
In this example,
we have an individual who holds multiple accounts in different branches of a
bank. The accounts include savings, current, fixed deposit, and recurring
deposit accounts. Each account has a different balance.
According to the
statement, "deposits held in the same capacity and same right refer to
multiple accounts opened by an individual." Therefore, all the accounts
held by the individual are considered collectively.
The insurance
cover is available up to ₹5 lakh, which means that if any unfortunate event
occurs and the bank faces financial distress, the individual's combined
deposits up to ₹5 lakh will be protected under the insurance scheme. In this example,
the total balance of all the accounts is 1,150,000 INR, which is below the
insurance cover limit, so the individual's deposits are fully protected.
Deposits held in
different capacities and different rights occur when an individual opens
accounts in different capacities, such as a partner of a firm, guardian of a
minor, director of a company, trustee of a trust, or a joint account with a
spouse. In this case, the deposits enjoy separate insurance coverage up to ₹5
lakh.
For instance,
let's consider an individual named John who holds multiple accounts in
different capacities. John has the following accounts:
| Account Type | Account Holder | Account Balance (in INR) |
|---|---|---|
| Savings | Partner of a firm | 200,000 |
| Current | Guardian of a minor | 300,000 |
| Fixed Deposit | Director of a company | 400,000 |
| Savings | Trustee of a trust | 100,000 |
| Savings | Joint account with spouse | 150,000 |
As mentioned
earlier, since these accounts are held in different capacities and rights, they
enjoy separate insurance coverage. Each account is eligible for insurance
coverage up to ₹5 lakh. This means that in the unfortunate event of any
financial distress, each account will be protected individually up to the
insurance coverage limit of ₹5 lakh.
Conclusion:
Knowing that
your money is insured can provide peace of mind and reassurance. By following
the steps outlined in this article, you can check if your money in the bank is
insured in the Indian context. Remember to identify your bank, research the
deposit insurance scheme provided by DICGC, understand the coverage limits, and
check DICGC's list of insured banks. Being proactive in understanding deposit
insurance will help you ensure the safety and security of your hard-earned
savings.
