Sep 21, 2023, 01:25 PM IST

What if your bank fails or closes?

ZeeBiz Webdesk

Bank failure is a fear of every bank customer, and sometimes non-banking customers are also curious about this.

What is bank failure?

If any bank is unable to meet its financial obligations to creditors and depositors, it fails.

What happens to the deposited amount?

If you have ever wondered about the security of your deposits in banks, don't worry; most of your money is safe under DICGC, a subsidiary of the RBI.

Deposit Insurance and Credit Guarantee Corporation (DICGC) covers almost all types of deposits you have in the bank, including savings, fixed, current, and recurring deposits.

According to RBI, the DICGC insures principal and interest up to a maximum amount of Rs 5 lakh.

What if you have multiple bank accounts?

The insurance limit applies to each account separately, which means the money you have in each bank is protected up to the limit of Rs 5 lakh.

Does DIGC directly contact to bank depositors?

The DICGC doesn't directly interact with the depositors of failed banks, it gives money to the bank, and it's the bank's responsibility to distribute it to the depositors.

Images: Freepik, Pexels