We deposit our savings in banks to protect them. Millions of people in our country also deposit the hard-earned money of their lives in banks as FD, so that they can fulfill their necessary requirements on time. People deposit money in banks, but somewhere they have a question in their mind, what will happen to their money if the bank fails? The concerns of the people have further increased after the PMC bank case came to the fore. Today, we are going to tell you what will happen to your hard-earned money if the bank fails. Though the economic condition of most of the public sector and private sector banks is good, people are still worried about their money. In February, Finance Minister, Nirmala Sitharaman in her budget speech, has given a major relief to the account holders. In the budget speech, the finance minister announced to increase the insurance amount for depositors in case the bank failed.
On receipt of the approval of the Government of India, the Reserve Bank of India has increased the amount of insurance cover per depositor to five lakh, which was earlier Rs. 1 lakh. Now, in case of failure of the bank, the deposit of up to five lakh customers will be assured and refunded to the depositor. This increased amount limit for insurance cover has come into effect from 4th February. Here, this scheme of deposit insurance is offered by deposit insurance and credit Guarantee Corporation. It is a wholly-owned subsidiary of the Reserve Bank of India. Deposit Insurance and Credit Guarantee Corporation does not directly take any premium amount from the depositor of the bank for this insurance cover, but banks have to pay the premium for this insurance cover.
This insurance cover scheme includes all kinds of bank deposits like savings, FD deposits, recurring deposits, etc. The scheme covers a total amount of up to five lakh rupees by merging principal and interest amounts. This deposit guarantee applies only when the bank closes. All deposits indicated by the depositor are carried out in all branches of a particular bank, which has failed under the scheme. That is, if a person has deposited money in various branches of a bank, he will be paid up to a maximum of five lakh rupees under the insurance cover on bank failure. There will be no combination of the amount deposited in different banks.
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