Deposit in Banks

Are you one of many, who thinks their deposits in nationalised banks are safe, read.............

Generally the persons, who deposit in banks, think if the money is deposited in nationalised banks, their deposits are safe. Because the nationalised banks are owned by government and government will pay them the deposits. But actually it is not so.

Indians have deposited Rs. 9,85,000 Crore in different banks. In last 5 years deposits have shoot up more than 100 %. When share market was going up, the private and co-operative banks were paying about 0.5 % or so more than the nationalised banks and people were putting their money with non-nationalised banks. But now they have lost the trust and they withdraw deposits from other banks and are putting them in nationalised banks, thinking they are doing the right move. But deposits up to Rs. 1 lac per account is insured with any bank - nationalised or private or co-operative banks.

There is a RBI subsidiary company - Deposit Insurance & Credit Guarantee Corporation of India (DICGCI). When we open an account in any bank, the bank pays to DICGCI Rs. 100 as a premium for insurance of Rs. 1 Lac. So if the bank goes insolvent, we may get Rs. 1 Lac maximum. If we want to cover the deposits of more than 1 Lac, we have to purchase a policy separately and we have to pay the premium regularly. Other option is that open more accounts in different banks and do not deposit more than Rs. 90,000 in each account, as the 1 Lac limit is with interest accrued on your deposits. If the account is held in joint name(s), then the first account holder only gets the sum. For joint account the coverage limit remain 1 Lac ( as the insurance is per account).

Central Government provide this shied since 1962. The limit was increased to 1 Lac in 1993. In the last 15 years, there is no change in the limit. Now the depositors demand the limit should be at least 5 Lacs. Since 1969 (after nationalisation of Banks), no bank has gone insolvent, it doesn't assure that it will never happen. During the period 31 banks turned financially weak but were merged with other banks to protect depositor's interest. Since last 5 years, banks are giving loans liberally. Loans are given to persons who are not capable of repaying the loan which any time may force banks to bankrupt.

More to note :

• Whatever you deposit in Bank's safe deposit locker in not safe in anyway. In Delhi, safe locker deposit of a bank was looted and no one was paid as the banks provide safe deposit locker facilities under a contract with the customers.
• According to the Deposit Insurance Act, the deposit insurance scheme is applicable only in the case of winding up, liquidation or amalgamation, etc, of a registered insured bank. As such, theft, robbery and other damages are beyond the purview of the scheme.

Now you know you and your deposits are not insured. DICGCI even may not pay the insured 1Lac.

(For your reference, deposits with Lehman Brothers were insured and insurance companies had to pay 60,000 Crore US $ to the depositors. But instead of paying, the insurance companies have gone to court. And if the court orders to pay, many of these companies will be ruined. )