If your bank goes bust, only Rs 1 lakh of your deposit will be protected under insurance

If your bank goes bust, only Rs 1 lakh of your deposit will be protected under insurance

No matter how much you have deposited in your bank account in India, only Rs 1 lakh of your deposit would be insured, the Deposit, Insurance and Credit Guarantee Corporation has said. If a bank plunges into a crisis or heads for liquidation, an account holder can expect insurance cover on only Rs 1 lakh of his deposit, regardless of how many accounts he holds with that bank.

A debate about the safety of bank deposits started with the Punjab & Maharashtra Cooperative Bank (PMC Bank) going into the red. The bank had investments worth Rs 11,000 crore. There were demands to raise the ceiling on insured deposit from the existing Rs 1 lakh.

Now the Deposit, Insurance and Credit Guarantee Corporation, a wholly owned subsidiary of the Reserve Bank of India established in 1961 for the purpose of providing insurance of deposits and guaranteeing of credit facilities, has made it clear that the insured amount stays at Rs 1 lakh. The reply, in response to a query under the Right to Information Act, puts to rest speculations that the ceiling had been raised to Rs 2 lakh.

The corporation was not sure about another query raised in the same RTI application regarding the plans to raise this ceiling. The corporation said it was not aware of any such move.

Deposits in the commercial banks in India, Indian branches of foreign banks, local banks and the RRB are covered under insurance.

The insured amount was raised from Rs 30,000 to Rs 1 lakh in 1993. The corporation charges 10 paise per Rs 100 of every deposit as insurance premium. Until 2005, the premium was 8 paise.

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