Quick answer: Deposit insurance in India protects eligible deposits up to ₹5 lakh per depositor per bank, including principal and interest, in the same right and same capacity. It does not protect every rupee in every circumstance. Accounts at different branches of the same bank are added together, while eligible deposits at different insured banks receive separate cover.
Verified from: Deposit Insurance and Credit Guarantee Corporation (DICGC) guidance and circulars checked on 14 September 2026. DICGC is a wholly owned subsidiary of the Reserve Bank of India. Always verify a bank’s insured status and current rules with DICGC.
What this guide explains
- The real meaning of the ₹5 lakh limit
- How savings, current, recurring and fixed deposits are combined
- Why opening accounts at multiple branches does not multiply cover
- When joint accounts or different ownership capacities can be treated separately
- What is excluded and how claims are paid
- How to organise deposits without misunderstanding the guarantee
What deposit insurance covers
DICGC insures deposits such as savings accounts, current accounts, fixed deposits and recurring deposits held with insured banks, subject to statutory exclusions. The insurance is automatic for eligible deposits. An individual depositor does not normally buy a separate DICGC policy or pay a premium directly; insured banks pay the premium.
The maximum is ₹5 lakh for the total of principal and accrued interest held by one depositor at one bank in the same right and capacity. The ceiling was increased from ₹1 lakh to ₹5 lakh with effect from 4 February 2020.
“Up to ₹5 lakh” is essential language. If the eligible total is ₹2.8 lakh, protection is ₹2.8 lakh, not ₹5 lakh. If the eligible total is ₹7.2 lakh, the insured ceiling is ₹5 lakh and the balance is not covered by deposit insurance, though other recovery from liquidation or resolution may be possible.
Principal and interest share one limit
Interest is not insured on top of the ₹5 lakh principal limit. DICGC adds the principal and interest payable on the relevant cut-off date and then applies the ceiling.
Example: a fixed deposit has principal of ₹4.80 lakh and accrued interest of ₹35,000. The total claim value is ₹5.15 lakh. Deposit insurance is limited to ₹5 lakh, so ₹15,000 is outside the insured ceiling.
Another example: a depositor has ₹2 lakh in savings, ₹1.5 lakh in an FD and ₹40,000 in an RD at the same insured bank, plus ₹20,000 of accrued interest. The combined eligible amount is ₹4.10 lakh. It falls within the ceiling, so the full eligible amount is insured.
All branches of the same bank are combined
Opening deposits in several branches of one bank does not create several ₹5 lakh covers. DICGC aggregates eligible balances across all branches of the same bank when they are held by the same depositor in the same right and capacity.
Suppose Meera keeps ₹3 lakh in a savings account at the Delhi branch and a ₹4 lakh FD at the Mumbai branch of the same bank. For insurance, the total is ₹7 lakh plus eligible interest, not two separate branch totals. The maximum cover remains ₹5 lakh.
This rule matters for digital accounts too. A bank’s app, online brand or different branch code does not necessarily mean a different insured bank. Check the legal bank name shown on the deposit receipt and DICGC’s insured-bank list.
Different banks generally receive separate cover
If the same person holds eligible deposits at two separately insured banks, DICGC applies the ₹5 lakh ceiling separately to each bank. For example, ₹4 lakh at Bank A and ₹4 lakh at Bank B can each fall within its own ceiling, assuming both institutions are separately insured and the deposits are otherwise eligible.
Do not rely on branding alone. Two products may carry different brand names but belong to the same banking entity, while banks within one corporate group may still be separately licensed entities. Verify the precise legal institution.
For broader money-safety updates, see our RBI notification guide. If a digital payment—not a bank deposit—is stuck, use our UPI failed transaction and refund guide; payment-system reversal rules are different from deposit insurance.
What “same right and same capacity” means
DICGC does not look only at the spelling of a person’s name. It also considers the legal ownership capacity. Deposits held individually are grouped together. Deposits held as a trustee, partner, guardian or in another legally distinct capacity may be assessed separately when the ownership conditions are genuinely different and the bank records clearly show that capacity.
This is not a loophole for casually relabelling accounts. The underlying legal capacity and records must be real. If large balances depend on separate capacity treatment, obtain written clarification from the bank and professional advice.
How joint accounts are treated
Joint deposits can receive separate treatment from individual deposits, and different combinations of joint owners may be considered separately under DICGC rules. But accounts with the same set of joint owners in the same order are generally aggregated.
Example: “Anil, Bina” and another account named “Anil, Bina” at the same bank form the same joint combination and are grouped. A properly documented account in a different ownership combination may be assessed separately. The precise ordering and capacity in bank records matters; do not assume merely adding a name multiplies protection.
Families should keep nominations, account-holder names and operating instructions accurate. Nomination helps claim processing after death but does not itself increase the deposit-insurance limit.
Which banks are covered?
DICGC insurance extends to insured commercial banks, including branches of foreign banks operating in India, local area banks, regional rural banks, small finance banks and payment banks, along with eligible co-operative banks covered under the governing framework. The current insured status should be checked on DICGC’s official list.
A non-bank finance company is not automatically a bank. Corporate fixed deposits, some fintech balances and investment products can sit outside bank-deposit insurance. The presence of the word “deposit” or an attractive interest rate does not prove DICGC protection.
What is not covered?
DICGC identifies exclusions, including deposits of foreign governments, deposits of central or state governments, inter-bank deposits, deposits of state land development banks with state co-operative banks, amounts received outside India, and amounts specifically exempted with RBI approval. For ordinary consumers, the practical warning is broader: mutual funds, shares, bonds, insurance products, crypto-assets and corporate deposits are not bank deposits merely because they are sold through a bank or app.
Contents of a bank locker are also not deposits. Deposit insurance does not cover cash, jewellery or documents stored in a locker. Locker liability follows different contractual and regulatory rules.
When does DICGC pay?
Deposit insurance is not an on-demand top-up for routine withdrawal problems. It becomes relevant when an insured bank is liquidated, reconstructed, amalgamated under an eligible arrangement, or placed under restrictions that trigger the statutory payment mechanism.
For banks placed under All Inclusive Directions with restrictions on withdrawal, the amended framework provides a time-bound process. DICGC’s guide describes payment within 90 days, subject to the bank submitting depositor information within the prescribed first 45 days and subsequent verification and payment steps. A depositor may need to provide consent or updated KYC to the bank.
The claim is normally handled through the liquidator, transferee bank or insured bank under DICGC’s process, rather than through a random third-party form. Do not pay agents who promise to “release” insured money.
What depositors should do if a bank is restricted
- Read notices from RBI, DICGC and the bank; ignore social-media rumours.
- Update PAN, Aadhaar, mobile number, address, nomination and account details with the bank.
- Provide the consent or claim information requested through the official channel.
- Keep account statements, FD receipts and acknowledgement records.
- Confirm the alternate bank account into which an approved payment will be sent.
- Never share OTPs, PINs or remote-access control with a person claiming to speed up insurance.
How to check your own exposure
- List every savings, current, recurring and fixed deposit balance.
- Group accounts by the exact legal bank—not by branch or product brand.
- Separate genuine ownership capacities and joint combinations only where bank records support them.
- Add accrued interest to each group.
- Compare each bank-and-capacity total with ₹5 lakh.
- Check that each institution appears on DICGC’s insured-bank list.
A spreadsheet reviewed every quarter is often enough. Include deposits opened through fintech marketplaces, because the underlying bank determines the insurance grouping.
Should you split money across banks?
Diversifying large cash deposits across separately insured banks can reduce concentration above the insurance ceiling. But insurance is not the only factor. Consider service quality, access, interest rates, tax reporting, premature-withdrawal penalties, fraud controls and the operational burden of multiple accounts.
Do not break an emergency fund into so many accounts that access becomes difficult. A practical plan keeps essential liquidity available while clearly identifying which amount sits within or above each bank’s insured ceiling.
Common myths
“Every account gets ₹5 lakh cover.”
False. Eligible accounts are aggregated per depositor per bank in the same right and capacity.
“Every branch gets separate insurance.”
False. Branches of the same bank are combined.
“The limit is ₹5 lakh principal plus interest.”
False. Principal and interest together are capped at ₹5 lakh.
“Joint accounts are never separately covered.”
Too broad. Genuine joint ownership combinations and capacities can be treated separately, but identical combinations are aggregated.
“Anything sold by a bank is insured.”
False. Investments and locker contents are not bank deposits.
Frequently asked questions
Is the insurance automatic?
Yes for eligible deposits at insured banks. The bank pays the premium to DICGC; depositors should not be charged a separate DICGC premium.
Are fixed deposits covered?
Eligible bank FDs are covered, but all eligible deposits at the same bank in the same capacity are combined and principal plus interest share the ₹5 lakh ceiling.
Are payment bank deposits covered?
Deposits at an insured payment bank fall within DICGC coverage, subject to the same legal framework and product limits. Verify the institution on DICGC’s list.
Does nomination create another ₹5 lakh limit?
No. A nominee is generally the person designated to receive funds after the depositor’s death; nomination alone does not change the depositor’s insured ownership capacity.
Can DICGC rules change?
Yes. The statutory framework, timelines and institutional status can change. Check the current DICGC website before making a large-deposit decision.
Official sources
- DICGC frequently asked questions
- DICGC guide to deposit insurance
- DICGC circular increasing cover to ₹5 lakh
- DICGC insured-bank information
Bottom line
The dependable formula is: eligible deposits, including interest, up to ₹5 lakh per depositor per insured bank in the same right and capacity. Combine all branches of one bank; assess separately insured banks separately; document joint ownership correctly; and distinguish bank deposits from investments. Browse more verified explainers in Consumer Money and RBI & Banking.
Last verified: 14 September 2026. This article provides general public information, not personalised financial or legal advice. Check DICGC and RBI notices for the latest position. Corrections will be recorded when official rules change.