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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


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