Government to Hike Deposit Insurance from ₹5 Lakh Limit 

The Ministry of Finance is considering to hike deposit insurance limit from ₹5 lakh to ₹8–12 lakh. If implemented, this increase will provide greater financial security to depositors across all banks. Read on to explore the potential impact of this hike and how it could safeguard your savings. 

What is Deposit Insurance?

Deposit insurance is a financial safety net provided to depositors, ensuring that their money remains secure even if a bank fails to repay its deposits. It covers various types of deposits, including fixed deposits, recurring deposits and savings accounts, safeguarding depositors from potential losses.

However, certain deposits are excluded from this coverage. These include deposits made by inter-banks, state or central governments and foreign banks. 

Centre to Hike Deposit Insurance from ₹5 Lakh Limit

In India, Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the Reserve Bank of India (RBI), has been established to provide this insurance to depositors. Under DICGC’s cover, depositors are protected with an insurance guarantee of up to ₹5 lakh per depositor per bank, covering both the principal amount and the interest earned. 

The Centre has decided to hike deposit insurance in India provided by DICGC from ₹5 lakh to ₹8 - 12 lakh.

How Does DICGC Work?

The objective of DICGC’s Deposit Insurance is to protect small depositors from the risk of losing savings against any bank failure. Banks in India must register with DICGC. Once registered, banks receive a certificate confirming the coverage. 

To provide this protection, banks pay a fixed premium to DICGC, but depositors do not have to pay anything. If a bank fails, depositors can get up to ₹5 lakh, including both principal and interest, no matter how much they had in that bank. 

When a bank goes bankrupt, its liquidator submits claims to DICGC on behalf of depositors. After verifying the claims, DICGC releases the insured amount through the liquidator, ensuring depositors get their money.

DICGC Deposit Insurance – How It Has Grown Over Time

To safeguard depositors, the DICGC (Deposit Insurance and Credit Guarantee Corporation) provides insurance cover on bank deposits. Over the years, the coverage limit has been revised several times to match the needs of customers and ensure confidence in the banking system.

Here’s how the insurance amount has increased:

Reference: https://en.wikipedia.org/wiki/DICGC

Final Word 

Getting backed up by deposit insurance lets you make investments in banks worry-free. With the government's order to hike deposit insurance limits, you can get even more security on your investments. 

Did you know that Stable Money offers fixed deposit options that are insured by DICGC up to ₹5 lakh? Furthermore, we also have a 24x7 working customer support team to assist you if you end up facing any queries or issues. So what are you waiting for? Download our app today!

Read More About DICGC: