FDs are set to be safer than ever!

Dear Investor,

You may have heard of the ₹5L insurance on your bank deposits by the Deposit Insurance and Credit Guarantee Corporation (DICGC). (We certainly hope that you have).

Well, we have some good news for you. In a press conference held on 17th February, the Department of Financial Services confirmed that this ₹5L limit is under consideration to be raised in the near future! This means your bank deposits will be safer than ever.

“What is the DICGC insurance?”

It’s pretty simple, really. All your deposits with a bank, be it term deposits or in a savings account, are insured up to ₹5L by the DICGC, a subsidiary of the RBI itself. This ₹5L limit is for individual banks, so by making deposits within ₹5L with different banks, you can make sure all your deposits are insured.

And this insurance is free of cost to you! The banks are the ones paying the premiums.

The insurance limit has been increased several times, going from ₹5,000 at the beginning to ₹5,00,000 in 2020.

“How will this affect me?”

If this move goes through, it means your deposits with Small Finance Banks (SFBs) are safer than ever. You can already book absolutely safe deposits up to ₹5L at 9% p.a. with SFBs. If that limit goes up further, say ₹7L or ₹10L, all your bank deposits can earn best-in-class returns.

The increased insurance will make the banking market more competitive, as newer players make the most of the added trust. Small Finance Banks are here to make a change for good!

The increased insurance will make the banking market more competitive, as newer players make the most of the added trust. Small Finance Banks are here to make a change for good!

We’ll be sure to keep you informed with such deep dives into the financial system.

Until next time, have fun Super Investing!

Disclaimer: This content is meant purely for educational purposes and is not to be taken as an investment advisory.