Most of us keep our money in banks, in savings accounts for daily needs or high interest fixed deposits to earn high returns, trusting that it’s completely safe. After all, banks are seen as secure and well-regulated.
But every now and then, news about a bank facing financial trouble or withdrawal limits raises a familiar concern: what happens to my money if something goes wrong with the bank?
While such cases are rare, they remind us that it’s important to understand what protects our savings.
This is where deposit insurance under India’s DICGC scheme comes in. DIGC is an official safeguard that ensures a portion of your savings and FDs remains protected, even if a bank fails.
What is DICGC?
The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a subsidiary of the Reserve Bank of India (RBI). Its main role is to protect depositors by insuring deposits in banks, including savings accounts, fixed deposits (FDs), recurring deposits (RDs), and current accounts.
All scheduled commercial banks in India are covered under this scheme, and each depositor is insured up to ₹5 lakh per bank, including both principal and interest.
How Safe Are the Savings and FDs?
Most people assume that money in a bank is completely safe, but the truth is a little more nuanced. While banks are regulated and generally reliable, no institution is entirely immune to financial trouble. That’s why deposit insurance exists: to provide a safety net for depositors.
Your savings and fixed deposits are protected up to ₹5 lakh per bank, which includes both principal and interest. If you have more than ₹5 lakh in a single bank, the amount above the limit is not insured. However, deposits spread across multiple banks are insured separately, giving you an effective way to protect larger sums.
All types of deposits in a bank, savings accounts, FDs, RDs, and current accounts, are counted together for the insurance limit. So, the total balance across these accounts determines your coverage.
How the DICGC Claim Process Works?
The DICGC handles claims automatically; there’s no need for the depositors to apply for the claim separately. Here’s how the process works:
- Bank Failure or Liquidation: If a bank fails or its license is cancelled, the RBI notifies the DICGC
- Data Verification: DICGC collects depositor information and verifies balances in savings accounts, fixed deposits, and recurring deposits
- Payment of Insured Amount: Eligible depositors receive the insured amount — up to ₹5 lakh per bank, including interest, usually within 90 days of verification
What Is Covered and What Is Not Under DIGC
Not all deposits are fully protected, so it’s important to know what the deposit insurance for savings and FDs actually covers.
Covered Deposits:
- Savings accounts, including salary or regular accounts
- Fixed deposits (FDs)
- Recurring deposits (RDs)
- Current accounts for individuals
Not Covered:
- Deposits with NBFCs, co-operative credit societies, or corporate FDs issued by NBFCs
- Investments like mutual funds, stocks, insurance, or bonds
- Any amount exceeding ₹5 lakh per bank
How to Keep Your Deposits Fully Protected
While deposit insurance for savings and FDs provides a safety net, there are steps you can take to ensure your money is fully protected:
- Spread Deposits Across Multiple Banks: Since DICGC coverage is ₹5 lakh per bank, dividing your savings and fixed deposits across different banks increases the total amount protected. This ensures your safe fixed deposits remain fully insured
- Check Account Types: All eligible deposits — savings accounts, FDs, and RDs — are counted together per bank. Understanding this helps you manage a secure savings account without exceeding the insurance limit
- Choose Banks Carefully: Prefer scheduled commercial banks regulated by the RBI, as they are covered under the DICGC scheme. Avoid keeping all your money in smaller or less-regulated institutions
- Consider Joint Accounts: Joint accounts can offer partial additional coverage if structured properly
- Review Your Deposits Regularly: Keep track of balances in each bank to stay within insured limits
Final Thoughts
Understanding deposit insurance for savings and FDs is essential for anyone who wants to keep their money secure. While the DICGC scheme provides a reliable safety net for deposits up to ₹5 lakh per bank, being aware of coverage limits and planning your deposits wisely can make a big difference.
By spreading funds across multiple banks, monitoring your balances, and choosing scheduled commercial banks, you can ensure that your safe fixed deposits and secure savings account are fully protected. Knowing the system also helps you take advantage of insurance for FD in India without relying on assumptions or myths.
In short, deposit insurance for savings and FDs is not just a regulatory formality — it’s a practical tool to safeguard your hard-earned money and give you peace of mind.
