What’s new this time?
Experts say that after this amendment, depositors will not have to wait for the bank to go through the liquidation process, only then they can claim their deposit amount. If a bank is also in the Bank Moratorium, then the depositor can claim his money under the DICGC Act. In other words, this means that the new amendment will provide relief to thousands of depositors of those banks, which remain in the Moratorium for a long time.
What does the rule say?
Under the provisions of Section 16 (1) of the DICGC Act, 1961, if a bank sinks or goes bankrupt, the DICGC is liable to pay each depositor. There will be insurance up to Rs 5 lakh on his deposit. If you have an account with multiple branches of the same bank, then the deposit amount and interest will be added to all the accounts and only deposits up to 5 lakh will be considered safe. In this, both principal and interest are included. Meaning that if there is more than 5 lakhs by adding both, then only 5 lakhs will be considered safe.
Also read: EPF vs NPS: Where to invest to avoid shortage of money in old age?
What does DICGC Insurance cover?
All deposits of the bank come under the purview of DICGC. This includes savings account, fixed deposit account, current account etc.
How do you know that your bank comes under DICGC?
While registering any bank, the DICGC gives them a printed form, which contains information about the insurance received by the depositors. If a depositor needs information about this, then they can inquire with the bank branch official about it.
What is the total amount of insured deposits in different branches of the same bank?
A maximum deposit of Rs 5 lakh is insured on the total deposits of several branches of the same bank. If you understand in easy language, your total deposit in a bank is 8 lakhs, then only 5 lakh rupees will be considered safe if you default on the bank. The rest will not be guaranteed to meet you.
Does the depositor get the principal sum insured or does it also include the principal and the interest accrued thereon?
DICGC insures only the principal amount and the interest thereon. Together, the maximum of Rs 5 lakh of depositors remains safe. For example, suppose a person has deposited Rs 4,95,000 in his bank account and on this he has also received an interest of Rs 4,000. In such a situation, only 4,99,000 rupees of this person will be safe. However, if there is a deposit of Rs 5,00,000 in the account, then the interest on it will not be insured. This will not be insured because according to the rules, a maximum of 5 lakh rupees can be protected.
Can insurance amount be increased by opening multiple accounts in the same bank?
When calculating the amount of insurance by DICGC, all accounts are taken into account by the same person by the same bank. If these funds are owned by different types or have deposits in different banks, then the insurance amount will be different. Suppose you have opened an account in two banks, then these two accounts will be insured for a maximum of Rs 5 lakh.
Also read: Buying a house cheaper than Rs 45 lakh? You will get 1.5 lakh benefit on home loan
I have two bank accounts and if both these banks closed on the same day, what will be the amount of insurance?
The amount of insurance will be different on both your bank deposits. This will have any effect from the date of closure of the bank. On both these accounts you will get a maximum of Rs 5-5 lakhs.
How will you get benefit
The government will have many benefits by increasing the guarantee amount. One, people in banks will not bother about depositing money equal to the guaranteed amount. This will also increase people’s confidence in the banking system. This will increase savings with banks and they will be able to give more loans.