An overview of measures such as deposit insurance, which have been taken by the Reserve Bank of India (RBI) to protect Fixed Deposits.
Indians, in general, are known as people who like to put a portion of their earnings into savings and many of us opt to take the Fixed Deposit route to secure and earn on our savings. Fixed Deposits are generally considered to be fairly low-risk investments and people rarely have major concerns about getting their money back from the bank. All the same, what if something were to happen to the bank? It could close or have its license cancelled, or be liquidated. What would happen to your Fixed Deposit then?
Here are a few Fixed Deposit facts to help allay your fears.
Don’t Worry, Your Deposits Are Safe
That’s right! Effective regulation by the Reserve Bank of India (RBI) has ensured that your deposits are safe. The RBI has made Deposit Insurance compulsory for all banks and no bank can withdraw from it.
What Does This Mean?
This means that no matter what happens to your bank, whether it closes down, is liquidated, undergoes a reconstruction or amalgamation or is merged with another back, your money is still protected. Each depositor is insured for up to Rs. 1 Lakh for Savings, Fixed, Current and Recurring Deposits and this includes both the principle and the interest amount accrued.
Are Public Sector Banks Safer Than Private Sector Ones?
All banks in India, whether Public, Private, Co-operative or Foreign Banks (with branches in India), are covered by the Deposit Insurance. Given this, no one bank is safer than another.
What Happens If You Have More Than Rs. 1 Lakh Worth of Deposits?
The limit for the sum of the deposit insured is Rs. 1 lakh per person for any given bank. Even if you have your deposits in different branches of the same bank, they will be aggregated for the purpose of the insurance cover, which will only extend up to this amount (Rs. 1 lakh).
However, to protect yourself better, you can increase your Deposit Insurance cover by depositing your money in different banks. As long as the deposits are in separate banks, the Deposit Insurance will apply separately.
So, if you were ever worried that your money was at risk, you can rest easy because the RBI has you covered.
AND if you’re now looking for more banks to diversify your deposits, all you have to do is hit the button below and we’ll help you out!