What is insured under deposit insurance if a bank fails, are deposits in different banks separately insured?

Commercial Banks : All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are insured by the DICGC.Cooperative Banks : All State, Central and Primary cooperative banks, also called urban cooperative banks, functioning in States / Union Territories which have amended the local Cooperative Societies Act empowering the Reserve Bank of India (RBI) to order the Registrar of Cooperative Societies of the State / Union Territory to wind up a cooperative bank or to supersede its committee of management and requiring the Registrar not to take any action regarding winding up, amalgamation or reconstruction of a co-operative bank without prior sanction in writing from the RBI are covered under the Deposit Insurance Scheme. At present all co-operative banks are covered by the DICGC.

Getty Images

The DICGC insures all deposits such as savings, fixed, current, recurring, etc. deposits except the following types of depositsDeposits of foreign Governments;Deposits of Central/State Governments;Inter-bank deposits;Deposits of the State Land Development Banks with the State co-operative bank;Any amount due on account of and deposit received outside IndiaAny amount, which has been specifically exempted by the corporation with the previous approval of Reserve Bank of India

Getty Images

Each depositor in a bank is insured upto a maximum of 5,00,000 (Rupees Five Lakhs) for both principal and interest amount held by him in the same right and same capacity as on the date of liquidation/cancellation of bank’s licence or the date on which the scheme of amalgamation/merger/reconstruction comes into force.

Getty Images

The DICGC insures principal and interest upto a maximum amount of five lakhs. For example, if an individual had an account with a principal amount of 4,95,000 plus accrued interest of 4,000, the total amount insured by the DICGC would be 4,99,000. If, however, the principal amount in that account was five lakhs, the accrued interest would not be insured, not because it was interest but because that was the amount over the insurance limit.

Getty Images

Yes. If you have deposits with more than one bank, deposit insurance coverage limit is applied separately to the deposits in each bank. If I have my funds on deposit at two different banks, and those two banks are closed on the same day, are my funds added together, or insured separately?Your funds from each bank would be insured separately, regardless of the date of closure.

Getty Images

If a bank goes into liquidation, DICGC is liable to pay to the liquidator the claim amount of each depositor upto Rupees five lakhs within two months from the date of receipt of claim list from the liquidator. The liquidator has to disburse the claim amount to each insured depositor corresponding to their claim amount.”If a bank is reconstructed or amalgamated / merged with another bank: The DICGC pays the bank concerned, the difference between the full amount of deposit or the limit of insurance cover in force at the time, whichever is less and the amount received by him under the reconstruction / amalgamation scheme within two months from the date of receipt of claim list from the transferee bank / Chief Executive Officer of the insured bank/transferee bank as the case may be.”

Getty Images

The DICGC while registering the banks as insured banks furnishes them with printed leaflets for display giving information relating to the protection afforded by the Corporation to the depositors of the insured banks. In case of doubt, depositor should make specific enquiry from the branch official in this regard.

Getty Images

Read more on