Bank FDs are considered a safe investment, but according to RBI regulations, DICGC insurance only covers up to ₹5 lakh. You can only create a complete security cover by spreading your investments across multiple banks. Learn about bank regulations, safety measures, and ways to safely invest in FDs.
In today’s world, when there are so many investment options available, fixed deposits (FDs) remain a favorite choice for Indian investors. The main reason for this is that they are considered a safe investment, offering a guaranteed return. But is your money in an FD truly 100% safe? This is a question that many investors have. Let’s understand bank and RBI regulations, DICGC insurance, and all the related aspects so that you can be fully informed about your investments.
RBI rules regarding the safety of FD
The Reserve Bank of India (RBI) governs every bank under strict regulatory rules. This means that the likelihood of any bank going bankrupt is extremely low. However, if a bank’s license is revoked or it goes bankrupt, depositors are protected to a certain extent. This protection is provided through the Deposit Insurance and Credit Guarantee Corporation (DICGC). DICGC is a wholly-owned subsidiary of the Reserve Bank of India (RBI) that insures your bank deposits.
DICGC Insurance – How Much is the Coverage?
- Deposit Insurance and Credit Guarantee Corporation (DICGC) provides insurance on all your deposits including FD, savings account, current account and recurring deposits.
- DICGC provides insurance up to ₹5 lakh per depositor per bank.
- This amount includes both principal and interest.
- If you have multiple FDs in the same bank, then you will get coverage of up to ₹5 lakh only by taking the total of all of them.
Understand with an example
Suppose you have an FD of ₹4 lakh in Bank A and have ₹1.5 lakh in your savings account. The bank closes down. In this situation, the DICGC will only guarantee up to ₹5 lakh. This means you will get ₹5 lakh back, with the remaining amount dependent on the disposal of the bank’s assets.
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