How DICGC Provides Rs. 5 Lakh in Insurance Coverage to Protect Bank Customers

Almost everyone in the current situation has a bank account. In the nation, millions of bank accounts have been opened since the start of the Pradhan Mantri Jan Dhan Yojana. This indicates a rise in the amount of money coming in. However, have you ever considered the security protocols in the event that the bank files for bankruptcy or becomes insolvent?

Banks have procedures in place to protect their clients’ money. Generally speaking, banks provide a Rs 5 lakh insurance policy. The sum was previously estimated to be worth Rs 1 lakh. The Deposit Insurance and Credit Guarantee Corporation (DICGC) is responsible for providing this coverage.

The Reserve Bank of India owns the whole of DICGC. Recently, there has been a lot of inquiry over what happens to funds held in accounts at separate branches of the same bank.

This policy offers insurance coverage of up to Rs 5 lakh for accounts in all commercial banks in India, including foreign, rural, and cooperative banks. Cooperative societies are not, however, covered by this plan. It’s important to know that the DICGC offers up to Rs 5 lakh in insurance, which covers principle and interest.

When a person has accounts with several branches of the same bank, they are considered one and the same. The entire value of all of your bank accounts—savings, recurring, or otherwise—will be taken into consideration if you have put money in fixed deposits (FDs) in addition to other accounts.

The depositor will get the exact amount placed if the total balance across all accounts is less than Rs 5 lakh. The depositor will only get Rs 5 lakh even if the sum exceeds Rs 5 lakh. The payout is limited at this amount, regardless of the extra amount.

You may collect up to Rs 5 lakh from each bank if you have accounts with two separate banks and both of them file for bankruptcy. It’s crucial to remember that the highest insurance limit is Rs 5 lakh.