Bank Fixed deposit insurance is the facility provided by the Reserve Bank of India for all the FD depositors in India.

In addition, most people think that the FDs in banks are 100% safe.

and I will explore what is deposit insurance schem and how it safe guards depositors.

What is the Deposit Insurance Scheme?…

You know that fixed deposits are a great saving product that gives fixed interest plus principle at the time of maturity of a FD.

But in case of bank default, depositors may not get their interest on deposits and even the principle.

In order to safeguard the depositors from situations, this scheme will protect their FDs to some extent.

Moreover, generally, you need to buy insurance on your own for needs.

But when it comes to this scheme, the coverage is built in automatically when you deposit money.

and this insurance is provided by Deposit Insurance Credit Guarantee Corporation (DICGC).

In addition, DICGC is a subsidiary of the Reserve Bank of India.

Moreover, DICGC protects all your deposits in nationalised and private banks up to 5 lakh.

How does insurance work? …

In case of bank failure or bankruptcy, this DICGC ensures that under this scheme, up to Rs 5 lakh in principle plus interest will be paid.

If your principle is Rs. 4,50,000 and interest accumulated is Rs. 60,000, then under scheme claim you will be paid Rs. 5,00,000.

Advantages of Deposit Insurance Scheme for FD…

This scheme ensures that your deposit is safe up to 5 lakh rupees in any bank.

In addition, it is backed by the Government of India.

No matter what type of depositor you are, your FD of 5 lakh is covered in this scheme.

5 lakh is a very big amount for many depositors.

And this scheme ensures that at least poor middle-class money is protected to the maximum extent.

Conclusion…

Now, you understand the benefits of a bank fixed deposit insurance scheme.

and you the cover under the scheme.

So, plan as per financial needs and find other investment options also apart from bank FD.

Because FD is safe up to 5 lakh.

However, that doesn’t mean the bank is going to default.

Finally, I mean you need to be careful and take informed decisions in investments for your future financial goals.

Read about debt mutual funds—all you need to know.

Also read about the NPS Vatsalya Scheme.

and read, Is Bank Fd  a good investment?

also read about Pradhan Mantri Fasal Bima Yojana.

and read about why one crore term insurance is not good.

Also read about asset allocation and its importance…

And read about Why you should not take one crore term insurance?…