How much of your fixed deposit is insured by RBI’s DICGC in SBI, SFBs, IndusInd and other banks

While this accounting error is unlikely to hurt general depositors, it has once again put the spotlight on the deposit insurance cover for savings and fixed deposit accounts, marking the second time in the past two months.

Currently, the deposit insurance cover is provided by RBI's Deposit Insurance and Credit Guarantee Corporation (DICGC).

In case of bank failure or liquidation/cancellation of its licence by RBI, the DICGC provides a guaranteed refund of only up to ₹5 lakh against all deposits in a bank.

Which banks are covered under DICGC?

As per RBI website, DICGC covers all commercial banks, including SBI, IndusInd Bank, ICICI Bank, and small finance banks. The DICGC also covers all RBI approved state, central, and primary cooperative banks, which are also known as urban cooperative banks.

However, primary cooperative societies are not covered by the DICGC.

How much of depositor's money is insured?

The DICGC provides a cover of only up to ₹5 lakh to a depositor in a bank. This amount includes the principle as well as interest in all your savings, fixed, current, and recurring deposit accounts, with a bank.

For example, suppose you have invested ₹4 lakh in a fixed deposit account of a bank and earned an interest of ₹1.10 lakh. In this case, the DICGC will insure only ₹5 lakh (₹4 lakh principal+₹1,00,000 interest) while the remaining ₹10,000 in interest will not be covered.

However, the deposit insurance limit of ₹5 lakh applies separately to each bank. Therefore, it is often advised to spread deposits into multiple banks.

Deposit insurance limit increase demand

Deposit insurance cover was increased from ₹1 lakh to ₹5 lakh in 2020. However, because of the New India Co-operative Bank crisis, there have been demands from the general public to increase the deposit insurance guarantee limit from ₹5 lakh to at least ₹10 lakh.

However, currently there is no such proposal from the DICGC to increase the cover.