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Fixed Deposits are a savings option that are known for their stability and guaranteed returns. FDs are considered low-risk tools as market conditions do not impact the returns. However, in case of bank failures or when the institution faces financial concerns, FD insurance keeps your investment safe. In India, FDs issued by scheduled commercial banks are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) for deposits of up to ₹5 Lakhs. This insurance for fixed deposits covers both principal and interest, ensuring safety.
Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the Reserve Bank of India (RBI) offers fixed deposit insurance in India. If a bank declares bankruptcy, the DICGC insures deposits up to ₹5 Lakhs. This coverage includes both the principal and interest. Deposit insurance is exclusive to banks; NBFCs are not covered under this facility.
The Deposit Insurance and Credit Guarantee Corporation (DICGC) insures bank deposits. These include savings accounts, fixed deposits, current accounts, and recurring deposits. It provides insurance on fixed deposits, covering both principal and interest up to ₹5 Lakhs per depositor per bank.
For example, if you have the following deposits at Bank A:
Savings Account: ₹1,50,000
Fixed Deposit: ₹3,00,000
Recurring Deposit: ₹50,000
Your total deposits at Bank A would be ₹5,00,000, fully covered by DICGC insurance. However, if your deposits exceed ₹5 Lakhs, the additional amount will not be insured.
If deposits are held in different ownership names, each is insured separately. Deposits in different banks are also insured separately, up to ₹5 Lakhs each. For instance, if you hold ₹5,00,000 at Bank B and ₹4,50,000 at Bank C, both amounts are insured separately. This covers the entire ₹9,50,000.
The following are the types of deposits that are not insured by the DICGC:
Deposits in state/central government banks
Inter-bank deposits
Deposits of the State Land Development Banks with the state co-operative bank
Any deposits that are received outside of India
Deposits of foreign governments
Any amount that has been exempt specifically by the corporation with the earlier approval of the RBI
Through Bajaj Markets, our partnered banks offer fixed deposits that are covered under the DICGC. Your deposits are insured up to ₹5 Lakhs. This provides additional fixed deposit safety and peace of mind.
Understanding the DICGC rules for FD insurance is essential to know how your fixed deposits are protected. Here are some of the rules:
1. No Additional Cost
The insurance premium is covered by the banks, not by you. As a result, you benefit from FD insurance without paying any extra cost.
2. Insurance Claim
FD insurance is triggered only if the bank faces liquidation or bankruptcy. The coverage is not applicable while the bank is still operational.
3. Multiple Deposits in One Bank
If you hold multiple fixed deposits in one bank, they are combined for insurance. The total amount is insured up to the ₹5 Lakh-limit.
4. Separate Insurance for Different Banks
Deposits in different banks are insured independently, each up to ₹5 Lakhs. This provides broader coverage across your investments.
Fixed deposit insurance offers crucial protection for your savings. Here are its key benefits:
1. Guaranteed Protection
Fixed deposits are insured up to ₹5 Lakhs, covering both your principal and interest. This protection ensures your money is safe even if the bank fails.
2. Peace of Mind
With your retirement savings insured, you can invest confidently, knowing your emergency funds are secure. This coverage eliminates concerns about bank defaults.
3. No Extra Cost
The bank covers the insurance premium, so you get the coverage at no extra cost. Your savings are protected without impacting your returns.
4. Wide Coverage
The DICGC insures deposits in all commercial banks and regional rural banks. It also covers foreign bank branches in India. This broad coverage safeguards a wide range of investments.
5. Separate Insurance for Multiple Banks
Fixed Deposits in different banks are insured separately, each up to ₹5 Lakhs. This offers enhanced security across your entire investment portfolio.
Frequently Asked Questions
Is there any insurance on FD?
Yes, fixed deposits in banks are insured by the DICGC up to ₹5 Lakhs.
Is FD insured in India?
Yes, fixed deposits in banks are insured under the DICGC scheme, covering deposits up to ₹5 Lakhs.
Does DICGC insure Corporate FD?
The DICGC only insures deposits made in banks, not those made in NBFCs.
Will DICGC insure my Fixed Deposit if I have FDs in different banks?
Yes, DICGC insures deposits in each bank separately, up to ₹5 Lakhs per bank. If you have FDs in different banks, each is covered individually under the stated limit.
Which banks are insured by the DICGC?
The DICGC insures all commercial banks, regional rural banks, and local area banks. It also covers branches of foreign banks operating in India.
Does the DICGC insure only the principal?
The DICGC insures both the principal and accrued interest on an account. The total coverage is up to ₹5 Lakhs per depositor per bank.
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