IndusInd Bank is in the news this week as its stock crashed to a 52-week low (on March 11, 2025) due to an accounting error linked to forex derivative transactions. However, the stock recovered slightly the next day. This financial mess, which might not directly harm ordinary depositors, has once again drawn attention to bank deposit insurance. Earlier on several occasions, the RBI has taken preemptive or sometimes reactive measures and imposed restrictions on beleaguered lenders.
How safe is your money with DICGC?
The Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the Reserve Bank of India (RBI), guarantees a maximum of Rs 5 lakh deposited in a bank in case of failure, bankruptcy, or cancellation of license of a bank.
Which banks are covered by DICGC?
According to the RBI, DICGC covers all commercial banks (such as SBI, IndusInd, ICICI, and all small finance banks) as well as state, central, and urban cooperative banks. However, this insurance does not apply to primary cooperative societies.
Also read: Are your bank deposits safe? Concerns rise amid IndusInd Bank saga
What is the maximum insurance limit for a depositor?
DICGC provides insurance protection up to Rs 5 lakh, which includes all bank accounts (such as savings, fixed, current and RD accounts).
Example: If you have made a fixed deposit of Rs 4 lakh and earned Rs 1.5 lakh interest, DICGC will provide insurance only up to Rs 5 lakh (Rs 4 lakh principal + Rs 1 lakh interest). The remaining Rs 50,000 interest will not be covered.
However, this limit applies differently to each bank, so it is considered wise to invest in different banks to reduce risk.
Will the insurance limit increase?
In 2020, the deposit insurance cover was increased from Rs 1 lakh to Rs 5 lakh. But after the New India Co-operative Bank crisis, there is a demand to increase it to ₹10 lakh.
Finance Minister Nirmala Sitharaman was also asked a question on this issue in Parliament, to which she replied: “DICGC may propose to the government to increase the deposit insurance limit, keeping in mind its financial position and the interests of the banking system of the country.” However, at present, DICGC has not made any such proposal.
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