DICGC Insurance Cover: Does Rs 5 Lakh Limit Apply Per Bank Or Per Account?

The Deposit Insurance and Credit Guarantee Corporation (DICGC) covers bank customers for deposits up to Rs 5 lakh across commercial banks, including all foreign banks functioning in India, small finance banks (SFBs), regional rural banks (RRBs), local area banks (LABs), payment banks (PBs), and co-operative banks. However, if you think that it covers all your different accounts in different branches of a bank, you are mistaken. 

The Reserve Bank of India (RBI) clarified this through a post on social media platform X (formerly Twitter). It wrote: “If you hold deposits in more than one insured bank, deposit insurance is applied separately to each bank. This means your eligible deposits in each insured bank are covered independently by DICGC, up to Rs 5 lakh per depositor per bank, including principal and interest, subject to applicable conditions.”

What Does DICGC Offer?

The aim of establishing DICGC was to protect bank depositors’ (customers) interests and maintain their trust and confidence in the banking system. Initially started with a cover limit of Rs 1,500, the deposit insurance limit was increased to Rs 5,000 in 1968. It was further increased several times to reach the current limit of Rs 5 lakh, which has been effective since February 2020. 

The DICGC logo makes it easy for customers to know that the bank is covered under the DICGC cover. 

What Does DICGC Insurance Cover?

DICGC covers a depositor for deposits up to Rs 5 lakh. It includes both the principal and interest amount in a bank account. 

However, what you need to remember is that the coverage is bank-wise, not branch-wise or account-wise. In simple words, if a depositor has accounts/deposits in different branches of the same bank, the coverage will remain Rs 5 lakh for all the deposit accounts, including savings bank account, current account, fixed deposit (FD), and recurring deposit (RD) maintained with the bank. So, the balance in all the accounts with the bank will be added together to calculate the coverage of up to Rs 5 lakh. 

Another crucial point is ‘ownership’. So, even if different deposits are maintained with the same bank, only those accounts with the same ownership can be added together to work out the DICGC coverage. Simply, if an accountholder has a ‘single holding’ account and a ‘joint account’ in one bank, they wouldn’t be added for the purpose of insurance coverage. Only the same type of ownership can be added together, and different types of ownership will be treated separately for insurance coverage. 

So, if the funds are in ‘different banks’ or with ‘different types of ownership’ with the same bank, they will not be aggregated. They will be treated separately for the purpose of calculating insurance coverage under DICGC.