New Delhi: American banking systems are facing a big tragedy at this time. Within 2 weeks, 3 big banks have failed in America. After SVB Financial Group and Silvergate Capital Corp, now Signature Bank has also been shut down by New York State Financial Regulators. However, the Federal Reserve has assured the depositors of SVB and Signatures Bank that their deposits are absolutely safe. The Fed said that the depositors of both banks would be able to withdraw their money.
In the last few years, due to financial irregularities, the condition of many banks in India had deteriorated and it had come to the point that the Reserve Bank had banned money transactions. Due to these incidents, a question comes to the mind of many people what will happen to their money if the bank collapses?
Government guarantees up to 5 lakhs
In case of bank collapse or bankruptcy, the only relief the depositor has is the insurance cover provided by the Deposit Insurance and Credit Guarantee Corporation ie DICGC (Deposit Insurance and Credit Guarantee Corporation). Now the insurance cover under DICGC has been increased from Rs 1 lakh to Rs 5 lakh. Understand in simple language, if the bank account in which your money is deposited sinks, then you will get back the amount of Rs 5 lakh, even if the amount deposited in the account is more than Rs 5 lakh.
How does Deposit Insurance work?
DICGC cover is available for all banks. However, they have to register for this facility and pay the insurance premium. As per DICGC guidelines, each depositor in the bank is insured up to a maximum of Rs 5 lakh for the amount of principal and interest with him on the date of cancellation of the license of the bank or on the day of merger or reconstruction. This means that no matter how much money is deposited in the same bank by combining all your accounts, you will get an insurance cover of only Rs 5 lakh. This amount includes both the principal amount and the interest amount. If your principal amount is Rs 5 lakh in case of bank failure, you will get back only this amount and not the interest.
DICGC insurance coverage is available on these accounts
The insurance cover offered by DICGC works on deposits like savings accounts, FDs, current accounts, RDs, etc. DICGC’s Deposit Insurance covers all insured commercial banks including LABs, PBs, SFBs, RRBs, and Cooperative Banks. If your money is deposited in a bank, you can check whether it is registered for Deposit Insurance or not by clicking on the link given below…