Get your bank deposits insured & stay assured
Bank failures are rare, but not unknown. But what happens to the depositor’s money if by any sheer misfortune a bank does go under? The comforting part is that deposits are insured. An organisation by the name Deposit Insurance and Credit Guarantee Corporation (DICGC) administers this insurance scheme.
However, better knowledge of the way the Deposit Insurance Scheme operates can help you salvage the maximum amount out of a bad situation if and when it arises. Here are a few things that could be kept in mind. About the scheme
As of now, all commercial banks, branches of foreign banks, regional rural banks and co-operative banks are covered by the DICGC. Primary co-operative societies are, however, not covered. The coverage is expansive as most banks we normally deal with in our day-to-day life are covered. Bank deposits — savings, fixed, current, recurring, etc, are all covered. However, the DICGC only covers deposits payable in India.
The deposit insurance premium is borne by the bank. It is important to note though that registration of an insured bank with the DICGC can be cancelled if the bank fails to pay the premium for three consecutive half periods. In such a case, if the DICGC withdraws the cover, it notifies the public through newspapers. What to keep in mind
Watch out for the ceiling — the most important thing is that the deposits of each depositor are insured up to a maximum amount of Rs 1 lakh. This limit includes both the principal and accrued interest. But, if they together add up to more than the specified amount, a maximum of Rs 1 lakh will be paid.
The limit of Rs 1 lakh may seem small, but, it may not be wise to have that much money for an extended period in a savings account considering the low return.One can have more than Rs 1 lakh in multiple FDs, especially considering attractive rates offered these days. So, how you structure your FDs and spread them between different banks may be important.
Same bank, different accounts doesn’t help — the scheme details clearly point out that deposits kept by one person in different branches of one bank are aggregated and only a cumulative amount of Rs 1 lakh is payable. So, it might not help if you have more than Rs 1 lakh in your own individual name in different branches.
This also means that your savings account and all your FD accounts in one bank are aggregated as they are, in bank jargon, held in ‘same right and capacity’. But, if you hold an individual account and a joint account in the same bank, they are considered to be in ‘different right and capacity’ and are separately covered.
Spread over different banks - Thus, with what has been mentioned above, if you are going to have more than Rs 1 lakh cumulatively in your name, it may be better to spread it over different banks. Deposit insurance coverage applies separately to deposits in each bank.
i hope this article will give you info abt DICGS ........