In the present scenario, nearly everyone holds an account in a bank. Following the launch of Pradhan Mantri Jan Dhan Yojana, millions of bank accounts have been opened in the country. This has marked an increased inflow of funds. But have you ever wondered about the security measures if the bank faces insolvency or bankruptcy?
Banks have certain policies to secure the funds of customers. In general, banks provide insurance cover of Rs 5 lakh. Previously, the amount was valued at Rs 1 lakh. This cover is provided under the Deposit Insurance and Credit Guarantee Corporation (DICGC).
DICGC is a wholly owned division of the Reserve Bank of India. In recent times, many people have been asking questions about what happens to their money if they have accounts in different branches of the same bank.
This scheme covers all commercial banks in India, including foreign banks, rural banks, and cooperative banks, offering insurance coverage of up to Rs 5 lakh for accounts in these banks. However, cooperative societies are not included in this scheme. It’s crucial to understand that the DICGC provides a maximum insurance amount of Rs 5 lakh, which includes both principal and interest.
When an individual holds accounts in various branches of the same bank, these accounts are regarded as a unified entity. If you’ve deposited money in fixed deposits (FDs) and also have funds in a savings account, recurring account, or any other type of account in the bank, the total amount across all these accounts will be considered.
The aggregate balance across all accounts is tallied, and if it falls below Rs 5 lakh, the depositor will receive the precise sum deposited. However, if the total surpasses Rs 5 lakh, the depositor will still only receive Rs 5 lakh. Regardless of the excess amount, the compensation remains capped at this threshold.
If you have accounts in two different banks and both banks declare bankruptcy, you can receive up to Rs 5 lakh from each bank. However, it’s important to note that the maximum insurance limit is Rs 5 lakh.
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