DICGC Deposit Insurance: What ₹5 Lakh Actually Covers
DICGC, a wholly owned RBI subsidiary, insures deposits up to ₹5,00,000 per depositor per bank — principal and interest combined, aggregated across every account you hold at that bank. Spreading a larger corpus across separate banks, not separate branches, keeps the whole amount inside the insured limit.
Almost everyone knows the number is ₹5 lakh. Far fewer know it aggregates across all your accounts at one bank, includes accrued interest, and can be legitimately multiplied by holding deposits in different ownership capacities.
What DICGC is
The Deposit Insurance and Credit Guarantee Corporation is wholly owned by the Reserve Bank of India. Every commercial bank operating in India — public sector, private, small finance, payments and cooperative banks, and Indian branches of foreign banks — is covered. Banks pay the premium; depositors pay nothing and need not enrol.
The limit rose from ₹1 lakh to ₹5 lakh in February 2020. Since 2021, depositors can also access up to the insured amount within 90 days when a bank is placed under an RBI moratorium, rather than waiting for full liquidation — a meaningful change, because the old process could take years.
The three words that carry all the weight
"Per depositor per bank" is the whole rule. Cover is not per account, and it is not per branch. Every account you hold at a single bank in the same ownership capacity is added together, and ₹5,00,000 of that total is insured.
| Included | Excluded |
|---|---|
| Savings account balances | Deposits of foreign governments |
| Current account balances | Deposits of central or state governments |
| Fixed and recurring deposits | Inter-bank deposits |
| Accrued interest on the above | Deposits held abroad by the bank |
| Balances across every branch of the same bank | Amounts already recovered by the bank against dues owed to it |
Multiplying cover legitimately
Cover applies per depositor per bank in each distinct "right and capacity". Different ownership structures are treated as different depositors, which is a legitimate and RBI-recognised way to insure more than ₹5 lakh at a single institution.
One family, one bank, ₹20 lakh insured
- A, sole account: ₹5,00,000 insured.
- B, sole account: ₹5,00,000 insured.
- A and B, joint account with A as first holder: a separate capacity, ₹5,00,000 insured.
- B and A, joint account with B as first holder: another separate capacity, ₹5,00,000 insured.
₹20,00,000 fully insured at a single bank. The order of names on a joint account creates a distinct capacity — but note that a second joint account with the same names in the same order does not; it aggregates with the first.
What this means for chasing higher rates
Small finance banks and newer private banks routinely offer 75 to 150 basis points more than large public sector banks. The reflex is to treat that premium as a risk signal — but it is mostly a funding-cost signal, and below the insured limit the distinction is largely academic.
- Below ₹5 lakh at any DICGC-covered bank, your principal and interest carry the same sovereign-backed protection regardless of the bank’s size or rating.
- Above ₹5 lakh, the issuer’s own financial strength becomes a real consideration, because the excess is unsecured.
- Corporate and NBFC deposits are not DICGC-covered at all. A Bajaj Finance or Shriram deposit is a corporate obligation backed only by the issuer’s credit rating — a different risk category from a bank FD, however similar the product looks.
Structuring a larger corpus
- Work out maturity value, not deposit value, and keep it under ₹5,00,000 per capacity per bank.
- Use the capacities you genuinely have — sole and joint holdings across family members.
- Spread the remainder across separate licensed banks.
- Ladder tenures across those banks so reinvestment risk is spread as well as issuer risk.
- Keep senior-citizen rates in view: the 0.25–0.50% premium is often worth more than the rate difference between banks.
Frequently asked questions
How much of my fixed deposit is insured in India?
Up to ₹5,00,000 per depositor per bank, covering principal and accrued interest together, aggregated across every account you hold at that bank in the same ownership capacity.
Is the ₹5 lakh limit per account or per bank?
Per bank, not per account and not per branch. Ten accounts at one bank share a single ₹5 lakh cover. Accounts held in genuinely different capacities — sole versus joint, and joint accounts with a different first holder — are treated separately.
Are small finance bank deposits safe?
Below ₹5 lakh they carry identical DICGC cover to any other bank, so the higher rate they offer comes with no additional insured risk. Above the limit, the excess is unsecured and the bank’s own financial strength becomes relevant.
Are NBFC and corporate fixed deposits DICGC insured?
No. DICGC covers banks only. Deposits with NBFCs and corporates are unsecured obligations of the issuer, backed by its credit rating rather than by deposit insurance — a genuinely different risk category despite the similar product name.
Does DICGC cover interest as well as principal?
Yes, but within the same ₹5,00,000 ceiling rather than in addition to it. A deposit whose maturity value exceeds ₹5 lakh is partly uninsured, so size deposits against maturity value.
How quickly is a DICGC claim paid?
Since the 2021 amendment, depositors can receive up to the insured amount within 90 days of a bank being placed under an RBI moratorium, rather than waiting for liquidation to conclude.
Related
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