Insurance Cover for your Fixed Deposit in the Banks

Introduction

In this article I will be writing about the safety of your fixed deposit in the banks. In my earlier article I have written about how to avoid TDS on fixed deposit? and I received many comments for that post. One of the comment posted by Praveen says

I learn that of the total FD value, only about 1lac is assured by

the bank (or, is it govt.?). So, in case of heavy losses, or bankruptcy, a bank would only be able to provide 1L max irrespective of your total FDs. This is a little surprising to me – I rather call it shocking! Coz, all thru, I’d heard FDs in nationalized banks are the safest options. What is the true picture here? Again, is the 1L assured per branch, or per person overall.

Then I felt that writing separate article about the insurance for fixed deposits in the banks. Many people are assuming that all the money kept in the banks are safe and because of any losses RBI would guarantee to return the entire amount. But, that is wrong and this article explores some of the facts related to how much amount of your fixed deposit if safe in the bank. I hope you will enjoy this article. Please don’t forget to leave the comments after reading the article. As you can see, this article itself result of one of the comment posted in my previous article. If you like the article subscribe our future articles here.

Article on Fixed Deposit:

How to avoid TDS on Fixed Deposit?
Top 5 Rules for Fixed Deposit Investment
Fixed Deposit for Monthly Income
Tax Savings on Term Deposit under Section 80c

Who will insure your fixed deposit?

Deposit insurance and credit guarantee corporation (DICGC) is responsible for insuring your money in the banks. They will insure all the commercial banks and cooperative banks in India. The DICGC insures all deposits such as savings, fixed, current, recurring, etc. except the following types of deposits.

1. Deposits of foreign Governments.
2. Deposits of Central/State Governments.
3. Inter-bank deposits.
4. Deposits of the State Land Development Banks with the State co-operative bank.
5. Any amount due on account of any deposit received outside India.
6. Any amount, which has been specifically exempted by the corporation with the previous approval of Reserve Bank of India.

Maximum amount insured by DICGC

The maximum amount insured by DICGC is Rs.100000 for a single person in one banks. This is not for each branch. If you have deposit in the different branches, it will be aggregated and only up to Rs.100000 will be insured. It includes both principal and interest. There is no way of increasing the insurance amount. Incases where you deposited in the different banks, that amount will be insured separately.

If a customer opens more than one deposit account in one or more branches of a bank, e.g.Kamalan opens one or more savings/current account and one or more fixed/recurring deposit accounts etc., all these are considered as accounts held in the same capacity and in the same right. Therefore, the balances in all these accounts are aggregated and maximum insurance cover is available upto rupees one lakh.

If Kamalan holds other deposit accounts in his capacity as a partner of a firm or guardian of a minor or director of a company or trustee of a Trust or a joint account, say with his wife , in one or more branches of the bank then such accounts are considered as held in different capacity and different right. Accordingly, such deposits accounts will also enjoy the insurance cover upto rupees one lakh separately.

Summary

I hope now you understood the insurance cover for your fixed deposit in the banks. This is a important fact everyone should awareof. Please shre it with everyone you know about and all the financial planning in this website. Our hard earned money cannot be wasted easily. Thank you for reading this article. If you like the article please subscribe here.