The Night the ATMs Stopped Working
In September 2019, customers of PMC Bank woke up to a nightmare. Their debit cards stopped working. The RBI had placed restrictions on withdrawals. People who had saved ₹50 Lakhs for their daughter's wedding could suddenly withdraw only ₹1,000.
Many lost their life savings because they didn't know one simple rule: "Never put all your eggs in one basket."
This article is your guide to ensure that even if your bank collapses tomorrow, you don't lose a single rupee.
Financial security includes protecting your wealth from institutional failure. The tool that protects you is called DICGC (Deposit Insurance and Credit Guarantee Corporation).
What is DICGC Insurance?
DICGC is a subsidiary of the RBI (Reserve Bank of India). It provides insurance coverage to bank depositors if a bank fails or its license is cancelled.
The Golden Rule: Each depositor is insured up to a maximum of ₹5,00,000 (Five Lakhs) for both principal and interest amount held by them.
What is Covered? (The Umbrella)
DICGC covers almost all types of commercial and cooperative banks.
✅ Covered Deposits
- Savings Accounts
- Fixed Deposits (FD)
- Recurring Deposits (RD)
- Current Accounts
❌ Not Covered
- Deposits of foreign governments
- Inter-bank deposits
- Any amount specifically exempted by DICGC
The "Per Bank" Limitation (Crucial Security Detail)
This is where most people get confused. The ₹5 Lakh limit is applied "Per Bank", not "Per Branch".
⚠️ The Branch Trap
Scenario: You have ₹4 Lakhs in HDFC Bank (Branch A) and ₹3 Lakhs in HDFC Bank (Branch B). Total = ₹7 Lakhs.
Risk: Since both branches belong to the SAME Bank, your total insurance is capped at ₹5 Lakhs. You are at risk of losing ₹2 Lakhs if the bank fails.
The Expert Strategy: How to Insure >₹5 Lakhs
If you have ₹20 Lakhs, does that mean you are unsafe? No. You just need to structure your deposits correctly using the "Split Banking Strategy".
Method 1: Different Banks (The Horizontal Split)
DICGC covers each bank separately. If you split your money across different banks, each bucket gets its own ₹5 Lakh cover.
- SBI ₹5 Lakhs (Fully Insured)
- HDFC ₹5 Lakhs (Fully Insured)
- ICICI ₹5 Lakhs (Fully Insured)
Total Insured: ₹15 Lakhs.
Method 2: Different Capacities (The Joint Account Hack)
DICGC treats deposits held in "Different Rights and Capacities" as separate. This means how you hold the account matters.
If Mr. Ravi and Mrs. Priya have deposits in the SAME Bank, they can still get more cover:
| Account Type | Holder Pattern | Insurance Limit |
|---|---|---|
| Account 1 | Ravi (Individual) | ₹5 Lakhs |
| Account 2 | Priya (Individual) | ₹5 Lakhs |
| Account 3 | Ravi + Priya (Joint A+B) | ₹5 Lakhs |
| Account 4 | Priya + Ravi (Joint B+A) | ₹5 Lakhs |
Result: By changing the primary holder order, the same couple can insure up to ₹20 Lakhs in the SAME bank.
Are Small Finance Banks Safe?
Many people are attracted to Small Finance Banks (SFBs) because they offer 8-9% interest on FDs. But are they safe?
Yes. All scheduled Small Finance Banks (like AU, Equitas, Ujjivan) are covered by DICGC. The risk is the same as any other bank up to ₹5 Lakhs.
How to Check if Your Bank is Insured?
Every insured bank must display the DICGC logo and a printed leaflet in their branch. You can also verify the list on the official DICGC website.
The 90-Day Claim Rule
Earlier, getting money from a failed bank took years. But under the new amendment (2021), depositors must receive their insured amount within 90 days of the bank being placed under moratorium (restrictions).
Conclusion: Trust God, But Lock Your Car
We trust the banking system, and failures are rare in India. But "Rare" does not mean "Impossible".
Security Action Plan:
- Check your total deposits in each bank.
- If any bank holds >₹5 Lakhs, consider moving the excess to a different bank (preferably a large PSU or Private bank like SBI/HDFC/ICICI).
- For high-interest Co-operative bank FDs, stick strictly to the ₹5 Lakh limit.