Bank Collapses Rule: Suppose you have Rs 10 lakh deposited in your account. Suddenly the bank declares itself bankrupt. In such a situation, what will happen with your money? How much money will you get?
Bank Collapses Rule: It was a few days ago. Not long ago, after the bankruptcy of America-based Silicon Valley Bank (SVB) this year, people’s concerns regarding deposits in banks had increased. People started fearing the sinking of banks in India. Some remembered the crisis that hit India’s PMC Bank in 2019. Experts started fearing recession. Everyone started worrying in their own way. Recession came, but no bank in India went bankrupt this time. Just imagine how safe your money will be if this happens. Will you get all the money you have deposited or will some of it end up with the bank? Let us understand the rules.
How much money will you get back if the bank collapses?
Currently bank deposits up to Rs 5 lakh per person per bank are protected in all banks like State Bank of India, HDFC Bank etc. In case of any crisis in all urban cooperative banks like Saraswat Bank, Cosmos Bank and even payments banks like Paytm Payments Bank, Airtel Payments Bank etc., the person will get back Rs 5 lakh. The Government of India provides deposit insurance for bank deposits. This insurance is provided by the Deposit Insurance and Credit Guarantee Corporation. If any bank fails, DICGC will provide insurance coverage of up to Rs 5 lakh to each depositor per bank. To ensure whether a bank is insured under DICGC or not, the depositor can check with the concerned bank branch.
Then the money is deposited in two banks?
Deposit insurance coverage is applied separately on deposits in each bank. So if a customer has money in two different banks, both the deposits will be covered separately under the deposit insurance coverage up to a limit of Rs 5 lakh. If a person has two accounts in the same bank in which the total amount is more than Rs 5 lakh, the total cover will be limited to Rs 5 lakh. According to the Reserve Bank of India (RBI), deposits held in various branches of a bank are pooled for the purpose of insurance cover and a maximum amount of up to Rs 5 lakh is paid.
