# DICGC Deposit Insurance Explained: How Your ₹5 Lakh Cover Really Works

*All figures as of August 2026.*

## Quick answer: how much deposit insurance do you get in India?

Deposit insurance in India covers up to ₹5,00,000 per person, per bank. DICGC, a subsidiary of the RBI, runs the scheme. All your accounts at one bank — savings, current, FDs, RDs — pool into one limit, principal plus interest combined. Anything above ₹5 lakh is not insured.

You've seen the line on every fixed deposit receipt: "Deposits insured up to ₹5 lakh." Most of us quietly read it as "per account." The savings account gets ₹5 lakh of cover. The FD gets its own ₹5 lakh. The RD too.

That reading is wrong. And it can cost you lakhs.

Here is the actual rule: the Deposit Insurance and Credit Guarantee Corporation (DICGC), the RBI subsidiary that runs deposit insurance, covers a maximum of ₹5,00,000 per person, per bank. Not per account. Everything you hold at one bank (savings, current, FDs, RDs, across every branch) drops into one pot, and the insurance applies to the total. Principal and interest combined.

How big is this blind spot? DICGC's annual report says 97.6% of all deposit accounts were fully covered in March 2025. But only 41.5% of the money was. Small balances sit safely under the cap. Large ones are where people get hurt.

Let's walk through it properly.

## The one-cap rule

Start with who's in. Every bank most of us use is part of the scheme: [SBI, HDFC Bank, Axis Bank, small finance banks](https://thewealthblog.in/best-bank-accounts/), regional rural banks, and all co-operative banks. Membership is compulsory for insured banks. The bank pays the premium out of its pocket. It is not allowed to charge you for it.

Now the cap itself. DICGC's official documents say your deposits are insured "in the same right and same capacity." Stripped of legalese, here's the plain meaning: you, as yourself, in your own accounts, at one bank. One person. One bank. One cap of ₹5,00,000.

The short version: every branch and every account type at one bank is added together first, and the ₹5,00,000 cap applies to that combined total — principal plus interest included.

DICGC's own published example shows the pooling in action:

| Account | Balance |
|---|---|
| Savings | ₹4,17,200 |
| Current | ₹22,000 |
| Fixed deposit | ₹80,000 |
| **Total at one bank** | **₹5,19,200** |

Insurance pays ₹5,00,000. Left exposed: ₹19,200. The FD didn't get unlucky. The accounts were added together first.

Now look at what placement does. Say Priya has ₹3,00,000 in savings and a ₹2,50,000 FD at one bank. Total: ₹5,50,000. Insured: ₹5,00,000. Unprotected: ₹50,000.

If she had held ₹3,30,000 at one bank and ₹2,20,000 at a second, both would sit under their own caps. Fully insured. Same money, same banking system. The only difference is where she parked it.

One more trap, and freelancers fall into it constantly. A sole proprietor's business current account is legally "you." So if Arjun keeps ₹6,00,000 in his firm's current account and ₹1,00,000 in personal savings at the same bank, DICGC pools them: ₹7,00,000 against one cap. ₹2,00,000 stands outside the umbrella.

And no, spreading across branches doesn't help. Twenty branches of one co-operative bank is still one bank, one cap.

## The interest trap

Suppose your FD principal is exactly ₹5,00,000 and your bank fails. Every rupee of interest that was building up sits outside the cap. Nothing left for it.

DICGC explains this with its own example, and it's worth copying. Principal ₹4,95,000 plus accrued interest ₹4,000 comes to ₹4,99,000. Fully insured. But a flat ₹5,00,000 principal leaves interest with nothing. In DICGC's words, the interest loses out "not because it was interest but because that was the amount over the insurance limit."

Practical habit: [size your FDs](https://thewealthblog.in/calculators/fd-calculator/) so principal plus expected interest stays under ₹5 lakh. At 7% for one year, that means keeping the principal at roughly ₹4,65,000 or below (it matures to about ₹4,97,550).

## What's not covered: two different lists

Most confusion comes from mixing up two questions. Is my product type insured? And is my institution even inside the scheme? Answer them separately.

**Products and places outside the scheme entirely. Zero deposit insurance.**

| Not insured | Why readers trip up |
|---|---|
| Company FDs (NBFC deposits) | Look and pay like bank FDs, but they are not bank deposits |
| Mutual funds, stocks, bonds, ETFs | Market products carrying market risk, no capital protection |
| Cryptocurrency | No protection framework at all |
| Primary credit societies | Local "banks" that are not insured banks |
| Land Development Banks | Outside the scheme |
| Wallet and prepaid app balances | Under DICGC review, not covered today |

**Deposits excluded even at an insured bank:**

- Central and state government deposits
- Foreign government deposits
- Inter-bank deposits (bank lending to bank)
- Deposits received outside India (a foreign bank's Indian branches are insured; its overseas deposits are not)
- Anything DICGC specifically exempts with RBI approval

For a regular saver, the filter is short: a bank account or FD in India, at an insured bank, in your name. You're inside the scheme.

## When a bank fails: two roads, very different speeds

No sugar-coating here. How fast you see your money depends almost entirely on which road the regulators pick.

In short: payout speed depends on the route. Under All-Inclusive Directions, the RBI's fast track, depositors can receive their insured money within about 90 days — provided the bank files its depositor list within 45 days and each depositor submits a willingness form with ID. Under liquidation, no such timeline exists; settlements have taken years.

**Road one: All-Inclusive Directions (AID), the fast lane.** The RBI restricts a weak bank but keeps it operating, and insurance kicks in early. The sequence: the bank submits a depositor-wise list within 45 days, DICGC verifies it within 30 days, and payment follows within the next 15 days. Best case, cash reaches you in about 90 days.

But "90 days" always comes with fine print. It holds only if the bank meets its 45-day deadline and you submit a willingness form with ID proof to the bank's administrator. Miss either, and the clock stalls.

Real case: Shirpur Urban Co-operative Bank in Maharashtra went under AID on April 8, 2024. Depositors were paid by July 7, 2024. Thirteen weeks, start to finish. ₹43.46 crore reached 3,807 people.

**Road two: liquidation, the slow lane.** The licence is cancelled and the bank is wound down. On paper: the liquidator prepares the claim list within three months, and DICGC pays within two months of receiving it. Five months sounds tolerable. Practice is uglier, because lists arrive late and courts get involved.

Real case: United Co-operative Bank of Bagnan in West Bengal. Liquidation began May 13, 2021. Depositors were settled on January 8, 2025. Nearly four years, about 44 months.

And money above ₹5 lakh? Not written off, but stuck. It becomes an unsecured claim in the winding-up. You join the queue, recovery takes its own time, and the amount that finally comes back can fall short.

One last wrinkle: if you owed the failed bank money, say a loan or credit card dues, those are subtracted first. Insurance applies to what remains.

## FAQ: your DICGC deposit insurance questions answered

### Is the ₹5 lakh per account?

No. Per person, per bank. All your accounts there are pooled.

### Is interest paid over and above ₹5 lakh?

No. Principal and interest share the single cap.

### Do different branches mean different caps?

No. All branches of one bank count together.

### Are FDs insured differently from savings accounts?

No. The account type doesn't matter.

### Does a joint account double my cover?

Only sometimes. Several joint accounts with names in the same order are pooled into one cap. Change the order of names or the group of holders, and the new account earns its own ₹5 lakh (the rule in force since April 2007).

### Is my proprietorship business account separately insured?

No. Its balance pools with your personal deposits at the same bank.

### Do big banks offer bigger insurance?

No. An SBI depositor and a village co-operative bank depositor carry the identical ₹5 lakh. Bank size changes the odds of failure, not the size of the cover.

### Is everything at a bank insured?

No. Government deposits, inter-bank deposits, and deposits received abroad are excluded even at insured banks.

### Do I pay anything for this insurance?

No. Banks pay. Passing the cost to depositors is barred.

### Am I guaranteed ₹5 lakh within 90 days?

Only on the AID route, and only if the bank files its list within 45 days and you hand in the willingness form and ID. The liquidation route carries no such timeline.

### Is money above ₹5 lakh lost forever?

Not automatically. It ranks as an unsecured claim in winding-up. Recovery is slow and uncertain.

### Doesn't the government guarantee all bank deposits?

No. The ₹5 lakh DICGC layer is the only guarantee. Beyond it, your money rides on the bank's health and the resolution process.

### Are wallet app balances covered like bank deposits?

Prepaid wallet money is not covered today. DICGC is examining it.

### My local credit society calls itself a bank. Covered?

Primary credit societies are not insured banks. Their deposits carry no DICGC cover.

## Who pays for all this?

Quick version, since it touches your money only indirectly. Banks have paid 12 paise per ₹100 of deposits each year since April 2020, upfront, from their own funds. From April 1, 2026, stronger-rated banks pay a little less (8 to 11 paise) and the weakest stay at 12; the regulator calls this a risk-based premium. It reshuffles bank expenses. Your cover stays ₹5,00,000 either way. That is genuinely all a depositor needs to know.

## And the ₹7.5 lakh hike in the news?

As of August 2026, the legal limit is ₹5,00,000. Newspapers reported in June 2026 that a proposal to raise it to ₹7.5 lakh has reached the Prime Minister's Office. That is a proposal. Not approved, not in force.

History is worth respecting here. The last increase, from ₹1 lakh to ₹5 lakh, came in February 2020. The one before that was in 1993. Twenty-seven years passed between hikes. Plan your deposits around ₹5 lakh, and treat bigger numbers as talk until DICGC itself announces them.

## What to do today

1. Confirm your bank is on the insured list at dicgc.org.in. Two minutes, done once.
2. Add up everything you hold at each bank: savings, FDs, RDs, current account (including a proprietorship account), plus interest expected till maturity. Compare the total with ₹5 lakh.
3. Over the cap anywhere? [Move the excess to a second insured bank](https://thewealthblog.in/best-savings-bank-accounts-in-india/). Two banks, two caps. Breaking an FD early usually costs a small penalty — often worth it when a meaningful amount sits above the cap.
4. Keep your KYC and nominee details current. If your bank ever enters the fast AID route, payment needs your signed willingness form and ID through the bank's administrator.
5. Don't treat company FDs, wallet balances, or society deposits as insured. They aren't.

Heavy on small-finance-bank deposits earning 6–7%? We put four SFBs through the safety test — licence status, credit rating, sweep behaviour — in our guide to [spreading an emergency fund across small finance banks](https://thewealthblog.in/small-finance-bank-safe-spread-emergency-fund/).

And once that money is parked safely, make sure the interest it earns is taxed efficiently — see [tax exemption on savings interest: 80TTA vs 80TTB explained](https://thewealthblog.in/80tta-vs-80ttb/).

## Key takeaway

One number does all the work: ₹5,00,000, per person, per bank, everything pooled, interest included. Fast payout (around 90 days) belongs to the AID route alone, with conditions. Liquidation can take years. Bank failures are rare, but rare is not never. Shirpur's depositors waited 13 weeks; Bagnan's waited nearly four years. Read the cap now, spread your deposits if needed, and you'll never have to learn these rules mid-crisis.

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*This is for educational purposes only. Consult a qualified financial advisor for personalized advice.*

*Sources: DICGC FAQs and "A Guide to Deposit Insurance" (dicgc.org.in); DICGC Annual Report 2024-25; RBI press releases of February 4, 2020 and February 6, 2026; PIB release on the DICGC (Amendment) Act, 2021. The ₹7.5 lakh proposal is media-reported (Mint, June 2026) and unapproved.*