Skip to main content

Are banks deposits insured? (updated as on February 06, 2026)

People keep their savings (and earnings) in various bank accounts. But what happens if a bank fails (i.e. closes down)? Can the depositors get their money back? Are deposits with banks insured?

What is deposit insurance?

The deposits kept with the banks are insured by the banks with Deposit Insurance and Credit Guarantee Corporation (DICGC). In the event of failure of a bank, DICGC pays the depositors up to the insured amount of the deposits.

Which banks are covered for deposit insurance?

  1. Public Sector Banks
  2. Private Sector Banks
  3. Foreign Banks – branches of foreign banks functioning in India
  4. Small Finance Banks
  5. Payment Banks
  6. Regional Rural Banks
  7. Local Area Banks
  8. State Co-operative banks
  9. District Central Co-op banks
  10. Urban Co-op 

Primary cooperative societies are not insured by DICGC.

A list of banks insured with DICGC is available at https://www.dicgc.org.in/FD_ListOfInsuredBanks.html

Which deposits are covered for deposit insurance?

DICGC insures all deposits such as savings, fixed, current, recurring, etc. 

Which deposits are not covered for deposit insurance?

  1. Deposits of foreign Governments
  2. Deposits of Central / State Governments
  3. Inter-bank deposits
  4. Deposits of State Land Development Banks with State co-operative bank
  5. Any amount due on account of and deposit received outside India
  6. Any amount, which has been specifically exempted by DICGC with previous approval of RBI

What is the extent of insurance cover?

  • Deposit insurance is for up to ₹ 5,00,000/-, per depositor, per bank. 
  • The insured amount includes both principal and interest.
  • The deposits held by the depositor in the same right and same capacity are clubbed together to calculate the insurance cover.
  • The deposits kept in different branches of the same bank are clubbed together to calculate the insurance cover. However, the deposits kept in different banks are insured separately.

Which are the deposits held in the same right and same capacity?

  • All the deposit (Savings + Current + fixed + recurring) of Mr.A in the same bank  are clubbed together for the insurance cover.
  • If Mr.A opens deposit accounts in his capacity as a partner of a firm / guardian of a minor / director of a company / trustee of a trust / a joint account with another person in the same bank, then such accounts are insured separately. 
  • Deposit held in the name of proprietary concern where depositor is sole proprietor and deposit held in his individual capacity are clubbed together for insurance cover.
  • If more than one deposit accounts (savings, current, recurring or fixed) are jointly held by individuals in the same bank and their names appear in the same order, then all these accounts are clubbed together for insurance cover. However, if their names are not in the same order (for eg. A, B, C; or C, B, A; or C, A, B); or group of persons are different (for eg. A, B, C; or A, B, D) then, the deposits held in these joint accounts are insured separately. 

When is DICGC liable to pay?

  1. Bank goes into liquidation
  2. Bank is reconstructed or amalgamated / merged with another bank
  3. Banks is under RBI’s ‘All Inclusive Direction (AID)’

What is the recent amendment to DICGC Act, 1961?

Deposit Insurance and Credit Guarantee Corporation Act, 1961 (DICGC Act, 1961) was amended as per the notification issued on August 13, 2021. The amendments came into force from September 1, 2021. 

A key amendment to the Act mandates that the interim insurance payment to depositors is to be completed within 90 days from the date of imposition of AID by RBI. The insured bank must submit claims after imposition of such restriction within 45 days, and DICGC has to get the claims verified within 30 days and pay the depositors within the next 15 days. In case RBI is in the process of finalising a scheme of amalgamation of the insured bank with another banking institution or a scheme of compromise / arrangement / reconstruction and the same is communicated to DICGC, then the date of repayment can be extended by a period not exceeding 90 days.

What are other facts about deposit insurance?

  • The banks must mandatorily get insured with DICGC.
  • DICGC is wholly owned subsidiary of RBI.
  • As per RBI Annual Report 2023-24, the number of protected accounts (281.8 crore) as on September 30, 2023 constituted 97.9% of the total number of accounts (287.9 crore). In terms of amount, the total insured deposits as on September 30, 2023 were 44.2% of assessable deposits. The insurance cover is 2.9 times per capita income in 2023-24. Reserve ratio (Deposit Insurance Fund / Insured Deposits) as on September 30, 2023 stood at 2.02%.

(Updated as on February 06, 2026)

What is risk-based premium framework for deposit insurance in India?

  • DICGC has been operating the deposit insurance since 1962 on a flat rate premium system [presently 12 paise per ₹100 of assessable deposits (AD)]. Flat rate premium system does not differentiate banks which manage the risks better. 
  • DICGC Act, 1961 [Section 15(1)] provides for differential premium rates for different categories of insured banks. 
  • DICGC, with approval of RBI, has advised the insured banks on implementation of Risk Based Premium (RBP) framework. 
  • Salient features of the RBP framework are as below –
    • There shall be 2 risk assessment models – Tier 1 Model and Tier 2 Model. 
    • Tier 1 Model is applicable to Scheduled Commercial Banks other than Regional Rural Banks (RRBs), and based on supervisory ratings, quantitative assessment (CAMELS parameters) and potential loss to Deposit Insurance Fund (DIF) in case of failure of insured banks.
    • Tier 2 Model, applicable to RRBs and cooperative banks is based on quantitative assessment (CAMELS parameters) and potential loss to DIF in case of failure of insured banks.
    • The maximum Risk_model_incentive shall be 33.33% over the card rate.
    • RBP framework also provides benefits of vintage (signifying longer contribution to DIF without any major distress or claim payouts from DICGC). 
    • Maximum Vintage_incentive of upto 25% shall be provided.
    • The effective rate of premium therefore will be calculated as [Effective Rate = Card Rate × (1 - Risk_model_incentive) × (1 - Vintage_incentive)]
    • The framework envisages a rating override policy in case of adverse material information / development, subsequent to the initial risk rating.
    • The banks will be required to maintain confidentiality of ratings and not to disclose ratings or amount of premium paid to DICGC.
    • Local Area Bank (LABs) and Payments Banks (PBs) will continue to pay the premium at card rate (i.e., 12 paise per ₹100 of AD per annum) as there are data point limitations to bring them into a RBP model (they account for less than 1% of the premium collected).
    • UCBs under the Supervisory Action Framework (SAF) / Prompt Corrective Action (PCA) of RBI will continue to pay the card rate of 12 paise and will be considered for RBP from the financial year following the year in which the bank exits SAF / PCA.
    • RBP framework shall be effective from April 1, 2026 and will be reviewed at least once in 3 years.


References

Reserve Bank of India. (2008, November 25). 'FAQ-Deposit Insurance'. Retrieved from https://www.rbi.org.in/Scripts/FAQView.aspx?Id=64

Reserve Bank of India. (2024, May 30). 'RBI Annual Report 2023-24 - VI. Regulation, Supervision and Financial Stability'. Retrieved from https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1406

Reserve Bank of India. (2026, February 06). 'Risk-based Premium Framework for Deposit Insurance in India'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=62183


Follow at - Telegram   Instagram   LinkedIn   Twitter
Labels:

Comments

Post a Comment

Popular Posts

Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)

Reserve Bank of India (RBI) has issued the directions on maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) by banks. To whom are the directions applicable? The directions are applicable to the following Regulated Entities (REs) – Commercial Banks  Small Finance Banks (SFBs) Payments Banks (PBs) Local Area Banks (LABs) Regional Rural Banks (RRBs) Primary (Urban) Co-operative Banks (UCBs) Rural Co-operative Banks – State Co-operative Banks (StCBs) District Central Co-operative Banks (DCCBs) What is CRR? Every bank shall maintain in India by way of cash reserve, a sum equivalent to such percent of its Net Demand and Time Liabilities (NDTL) in India, as the RBI in terms of Section 42(1) of the RBI Act, 1934 (for scheduled banks) and Section 18(1) of the Banking Regulation Act (BR Act), 1949 (for non-scheduled banks) [including provisions of Section 18(1) of the BR Act as applicable to co-operative banks], may specify. What is incremental CRR? In terms of Secti...
Post a Comment
Read more

Credit Cards and Debit Cards

Reserve Bank of India (RBI) has issued directions on issuance of credit cards and debit cards. To whom are the directions applicable? The directions are applicable to the following Regulated Entities (REs) – Commercial Banks  Small Finance Banks (SFBs) Regional Rural Banks (RRBs) Primary (Urban) Co-operative Banks (UCBs) Non-Banking Financial Companies (NBFCs) for all layers – NBFC-Investment and Credit Companies (NBFC-ICC) NBFC-Factor  NBFC-Micro Finance Institutions (NBFC-MFI)  Housing Finance Company (HFC)  What is a credit card? Credit Card is a physical / virtual payment instrument issued with a pre-approved revolving credit limit that can be used to purchase goods and services or draw cash advances. What is a debit card? Debit Card is a physical / virtual payment instrument linked to a Savings Bank / Current Account which can be used to withdraw cash, make online payments, do Point of Sale (PoS) terminal / Quick Response (QR) code transactions, fund transfer, e...
Post a Comment
Read more

Special Rupee Vostro Accounts (SRVAs)

Reserve Bank of India (RBI) has consolidated the guidelines governing Special Rupee Vostro Accounts (SRVAs). Who can open and maintain Special Rupee Vostro Accounts (SRVAs)? Authorised Dealer (AD) banks in India may open Special Rupee Vostro Accounts (SRVAs) of its branch outside India or a bank resident outside India. Which transactions can be settled through SRVA? The settlement of cross-border trade transactions through SRVA is an additional arrangement for invoicing, payment and settlement of exports and imports in Indian Rupee (INR).  All permissible capital and current account transactions under Foreign Exchange Management Act (FEMA) may be settled through the SRVA.  AD banks maintaining SRVA are permitted to open additional current account for exporter / importer, exclusively for settlement of export / import transactions. What can be the source and use of funds in SRVA? SRVA may be funded by way of inward remittances or transfer from other repatriable INR accounts in t...
Post a Comment
Read more

Payment of Agency Commission to Agency Banks (ABs) and Disbursement of Government Pension by ABs

Reserve Bank of India (RBI) has issued guidelines on the conduct of Government business by Agency Banks (ABs), payment of agency commission to ABs and disbursement of Government pension by ABs. Who are ABs? ABs mean all Public Sector Banks (PSBs), scheduled Private Sector Banks (PVBs), scheduled Payments Banks (PBs), and scheduled Small Finance Banks (SFBs) appointed by the RBI under Section 45 of the RBI Act, 1934, by mutual agreement, to carry out Government banking business of the Central Government (CG) / State Governments (SGs). What is agency commission? Agency commission means the remuneration paid by the RBI to an AB in consideration of it acting as an agent of the RBI in the conduct of general banking business of the CG and the SGs at the places and in the manner specified in the agreement between the RBI and the bank, with the exception of the functions relating to the management of the public debt. What are the guidelines on appointment of ABs? Any eligible bank which intend...
Post a Comment
Read more

Highlights of RBI Annual Report 2025-26 – Chapter 7 to 12

Reserve Bank of India (RBI) has published its annual report for the financial year 2025-26. In a series of articles, we will go through the highlights of the report. This is the fifth and final article in the series.  Chapter 7 – Public Debt Management The ways and means advances (WMA) limit for the Government of India (GoI) for H1:2025-26 (April to September 2025) was fixed at ₹1,50,000 crore and for H2:2025-26 (October 2025 to March 2026) was fixed at ₹50,000 crore. The RBI entered into an agreement with the Government of National Capital Territory of Delhi (GNCTD), under Section 21A(1) of the RBI Act, 1934, to carry on the general banking business of GNCTD and manage its rupee public debt. The WMA limit of GNCTD was set at ₹890 crore, taking the aggregate WMA limit of all the states / UTs to ₹61,008 crore. The RBI introduced Separate Trading of Registered Interest and Principal of Securities (STRIPS) in the state government securities. Retail Direct Gilt (RDG) account – An au...
Post a Comment
Read more