Finance Minister Nirmala Sitharaman had announced in her speech presenting Union Budget 2020, that bank deposit insurance for every depositor will be hiked from Rs 1 lakh per depositor to Rs 5 lakhs per depositor. The decision of the government came after the PMC episode, where depositors had to suffer in the light of all the clampdowns imposed by RBI on PMC bank.
As per current guidelines, all commercial and co-operative banks are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC). The Primary Co-operative Societies are the only ones not covered under the DICGC.
Earlier, if the bank in which you have deposited your hard-earned savings goes bankrupt, you were eligible to get a maximum amount of Rs 1 lakh only, regardless of the amount you had deposited in your bank account. The recent changes in the rules enables a common man to breathe a sigh of relief, as due to updated norms, a depositor will be eligible to a maximum of Rs 5 lakhs of the entire amount that has been deposited.
Deposits covered under DICGC
All deposits such as savings, fixed, current, recurring and so on are covered under DICGC, except the following deposits:
- Deposits of foreign governments
- Deposits of Central or 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 India
Any amount, which has been specifically exempted by the corporation with the previous approval of Reserve Bank of India
Multiple and Joint account holders
If a person is a multiple account holder in the same bank, then according to the norms set in the Budget 2020, the DICGC covers all the accounts even if they are present in different branches. This means that if a person holds multiple accounts in the same branch, then he is eligible to get a maximum of Rs 5 lakhs for every account no matter the branch they have deposited their money in. In the scenario where a person has joint accounts and single account, both will be covered separately.