Deposit Account

A Safe Cover is the most secure way to make bank deposits.

When rumors about a private bank's financial stability began to circulate, people flocked to the bank's ATMs in the early hours of the morning to withdraw funds. One of my companions, who had large sums of fixed deposits with the bank, called to inquire about the conversation.

When I asked whether he had comparable deposits with various banks, he replied that his whole overflow money of Rs 8 lakh was stopped with a similar bank because he didn't have an Interest Carrying Deposit Account with another bank! Stunned, I welcomed the open invitation to show him how deposit safety works in India. Here's what my companion, and those like him, ought to hear.

What is the total number covered?

The Deposit Insurance and Credit Guarantee Corporation of India (DICGC) insures all deposits of up to Rs 1 lakh in a company or agreeable bank in India (an entirely possessed auxiliary of RBI). The inclusion of insurance to the banks is accomplished by collecting a fee from the banks at half-yearly intervals at a rate of 10 paise per annum for each hundred rupees. The depositors have free access to the defense security. The front of Rs 1 lakh is applicable for your head and interest levy combined. Deposits in different banks are individually insured, with each deposit eligible for Rs 1 lakh protection.

What types of deposits are protected?

Safety is available for savings accounts, current accounts, recurring deposits, and fixed deposits. Both commercial banks, including sections of foreign banks operating in India, as well as neighborhood and regional rural banks, are covered. Except for the states of Meghalaya and the Union Territories of Chandigarh, Lakshadweep, and Nagar Haveli, all co-employable banks are currently protected by the deposit insurance system. The scheme does not currently cover essential agreeable social orders.

What are the methods for constructing a cover for my bank deposits?

Spreading your surplus through many banks is the quickest way to increase your deposit cover. You can also ensure that the deposits in a single bank are secure by using multiple pooled resources with different "first holders." In most cases, security would be given in the name of the principal holder.

What happens to deposits made in a mutual service?

If more than one deposit account (regardless of whether reserve funds, new, repeating, or fixed deposit) is kept by people in at least one section of a bank, then all of the accounts where their names appear in a related request would be accrued for the Rs 1 lakh cover. However, if deposits are owned by several first holders, each account will be eligible for a Rs 1 lakh security front.

Is it possible to increase the insurance for my deposit by paying a higher premium?

No, it does not. It is absurd to expect to pay a premium to increase the coverage. Such plans, however, can occur in the future. With the recent monetary strife in the US, the US Government has extended the cover from $1,00,000 to $2,50,000 as part of the rescue package. As a result, it's possible that the cover will be upgraded in India in the future.

How are settlement claims approved?

In the event that a bank is twisted up or liquidated, each depositor is entitled for an amount equal to the deposits owned by him at all sections of the bank set up, as of the date of the bank's lowering of enlistment. In this way, what my companion has to do to avoid agitated evenings at the ATM is to distribute his deposits through many accounts, thus increasing his overall security!