For most people, a bank account is where they keep their savings, emergency funds and other important money. While banks are generally considered a safe place to store money, many depositors may not know what protection is available if a bank faces serious financial problems.
In India, eligible bank deposits are protected under the Deposit Insurance and Credit Guarantee Corporation (DICGC). The scheme provides deposit insurance up to a specified limit, giving depositors an additional layer of protection.
But how does DICGC insurance actually work? Does the protection apply separately to savings accounts and fixed deposits? What happens when you have accounts at different banks? And what types of deposits are covered?
Understanding these rules can help you make better decisions about where and how you keep your money. In this article, we explain bank deposit insurance in India, how DICGC protection works, and the key rules depositors should know.
DICGC Is Owned by the RBI
The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a wholly owned subsidiary of the Reserve Bank of India (RBI). It operates under the Deposit Insurance and Credit Guarantee Corporation Act, 1961, and forms an important part of India’s financial safety net.
DICGC does not charge individual depositors for this protection. Instead, the insured banks pay the deposit insurance premium to DICGC. The premium is calculated based on the bank’s assessable deposits.
How Much Premium Do Banks Pay?
From April 1, 2026, DICGC has introduced a Risk Based Premium (RBP) Framework. Under this system, the earlier flat premium rate of 12 paise for every ₹100 of assessable deposits per year serves as the card rate, while banks with better risk profiles can qualify for a lower effective premium rate.
In simple terms, the maximum/card rate is equivalent to 0.12% per year.
For example, if a bank has ₹1,000 crore of assessable deposits and its applicable premium rate is 0.12%, the annual premium at the card rate would be approximately ₹1.2 crore.
The premium is paid half-yearly, rather than as one annual payment. DICGC determines the premium using the bank’s deposit base from the preceding half-year.
This means the cost of deposit insurance is ultimately borne by banks, not directly by customers. DICGC uses the premiums collected from insured banks to build and maintain its Deposit Insurance Fund, which is used for settling eligible claims when the insurance scheme is triggered.
The new risk-based system is designed to make the premium more closely reflect the risk profile of individual banks. Therefore, it is no longer accurate to say that every insured bank simply pays exactly 0.12% every year. 0.12% is the card rate, while the actual effective rate can be lower depending on the bank’s risk assessment and applicable incentives.
What Is the ₹5 Lakh DICGC Insurance Limit?
The DICGC deposit insurance limit is ₹5 lakh per depositor per bank. This includes both the principal amount and accrued interest on eligible deposits. The limit applies when deposits are held in the same right and capacity.
For example, if you have ₹4.80 lakh in eligible deposits and ₹15,000 of accrued interest, the total of ₹4.95 lakh falls within the insurance limit. If your total eligible deposits are ₹6 lakh, DICGC insurance would generally cover only up to ₹5 lakh.
Which Banks Are Covered by DICGC?
DICGC covers a wide range of banks operating in India. The deposit insurance scheme includes:
- Public sector banks
- Private sector banks
- Foreign banks operating through branches in India
- Small Finance Banks
- Payment Banks
- Regional Rural Banks (RRBs)
- Local Area Banks
- Eligible cooperative banks, including State Cooperative Banks, District Central Cooperative Banks and Urban Cooperative Banks
DICGC’s current list of insured banks contains the individual banks registered under the scheme. The deposit insurance scheme is mandatory for insured banks, meaning a bank cannot voluntarily opt out of DICGC coverage.
However, primary cooperative societies are not covered by DICGC. This distinction is important because not every organisation that uses the word “cooperative” is necessarily an insured cooperative bank.
If you are unsure whether a particular bank is insured, DICGC publishes an official list of insured banks that can be checked by depositors.
Does ₹5 Lakh Apply to Every Account?
No. The ₹5 lakh limit does not automatically apply separately to every savings account, fixed deposit or recurring deposit you have with the same bank.
Deposits held in different branches of the same bank are aggregated when determining the insurance coverage. For example, if you have ₹3 lakh in a savings account at one branch and ₹3 lakh in a fixed deposit at another branch of the same bank, the total eligible deposits are ₹6 lakh. The insurance coverage would generally be limited to ₹5 lakh.
The calculation can be different when deposits are held with different banks. DICGC applies the insurance limit separately to each bank.
For instance:
| Bank | Eligible Deposits | Maximum DICGC Cover |
|---|---|---|
| Bank A | ₹6 lakh | ₹5 lakh |
| Bank B | ₹4 lakh | ₹4 lakh |
| Bank C | ₹8 lakh | ₹5 lakh |
This means a depositor can potentially have insurance coverage at each separate insured bank, subject to the DICGC rules.
The key point is simple: ₹5 lakh is the maximum insurance cover per depositor per insured bank, not per bank account or per branch. Understanding which banks are covered and how deposits are aggregated can help depositors assess how much of their bank savings falls within the DICGC protection.
How Long Does It Take to Receive DICGC Insurance?
If an insured bank gets into serious financial trouble, depositors may wonder how quickly they can receive the amount protected under DICGC. The timeline depends on what happens to the bank.
Banks Under All-Inclusive Directions
When the RBI places an insured bank under All-Inclusive Directions (AID), DICGC is required to settle eligible deposit insurance claims within 90 days from the date the AID is imposed, subject to the required information being submitted by the bank.
The process has specific stages. The bank must submit the depositor list to DICGC within 45 days. DICGC then has up to 30 days to verify the authenticity and genuineness of the claims. After verification, payment is to be made within the following 15 days. This means the statutory process can take up to 90 days from the imposition of AID.
Depositors may also need to submit a willingness form and the required documents to the bank so that their claim can be processed.
If the Bank Goes Into Liquidation
The process is different when a bank is liquidated.
In such cases, the liquidator prepares and submits the claim list to DICGC. The liquidator is required to submit the list as soon as possible and, under the applicable rules, no later than three months after assuming charge. Once DICGC receives the claim list, it is required to pay the admissible amount within two months, subject to the applicable conditions.
Importantly, depositors generally do not have to file a separate insurance claim themselves when a bank is liquidated. The official liquidator prepares the claim on their behalf.
So, the often-quoted 90-day timeline applies specifically to banks placed under AID, while liquidation cases follow a different process and timeline.
DICGC’s actual experience also shows that claims can sometimes be processed faster than the maximum permitted period. In FY2024-25, DICGC reported that it took an average of 7 days to sanction claims after receiving the claim from liquidators under the relevant liquidation process. For banks under AID, DICGC reported adhering to the statutory 90-day timeline.
Therefore, depositors should not assume that money will automatically arrive exactly 90 days after a bank fails. The timing depends on whether the bank is under AID or liquidation, when the required depositor information reaches DICGC, and whether the claim information is complete and verifiable.
How Much Did Major Banks Pay for DICGC Insurance in FY2024-25?
DICGC collected ₹26,764 crore in deposit insurance premiums during FY2024-25. At that time, insured banks paid a flat premium based on their assessable deposits.
Some of India’s largest banks paid substantial amounts towards this insurance during the year:
| Bank | Type | DICGC Premium Paid in FY25 |
|---|---|---|
| State Bank of India (SBI) | Public Sector | ₹5,415.67 crore |
| Punjab National Bank (PNB) | Public Sector | ₹1,871.34 crore |
| Canara Bank | Public Sector | ₹1,696.22 crore |
| Bank of Baroda | Public Sector | ₹1,346.66 crore |
| Indian Overseas Bank | Public Sector | ₹758.70 crore |
| Indian Bank | Public Sector | ₹723.46 crore |
| Bank of India | Public Sector | ₹591.95 crore |
| Bank of Maharashtra | Public Sector | ₹478.00 crore |
| UCO Bank | Public Sector | ₹410.97 crore |
| HDFC Bank | Private Sector | ₹2,803 crore |
The nine public-sector banks listed above together paid approximately ₹13,293 crore in DICGC insurance premiums during FY2024-25. SBI was by far the largest contributor among them, paying more than ₹5,400 crore.
These payments are made by the banks and are not a separate insurance premium charged directly to depositors. The amount a bank pays is linked to its deposit base. DICGC’s rules specify that the premium is determined using the bank’s total deposits at the end of the preceding half-year.
It is important to remember that the premium paid by a bank does not determine how much an individual depositor can claim. The DICGC protection remains up to ₹5 lakh per depositor per insured bank, including eligible principal and interest.
The figures above are for FY2024-25. DICGC has since introduced a Risk Based Premium framework from April 1, 2026, so the premium calculation for subsequent years is different.
Final Takeaway
DICGC provides an important safety net for bank depositors in India. Eligible deposits are insured up to ₹5 lakh per depositor per bank, including principal and accrued interest.
The key point is that the limit applies to the bank, not each individual account. Depositors with large savings or fixed deposits should therefore understand how their deposits are combined and whether their bank is covered by DICGC.
DICGC does not eliminate all banking risks, but it provides valuable protection if an insured bank fails or faces circumstances covered under the deposit insurance scheme.
