Fixed deposits (FDs) are a trusted savings option, offering stability and a guaranteed interest rate. In case your bank defaults, you can also be insured against losing all your money. There have been many instances when banks collapsed due to bad loans and in turn disrupted the entire financial ecosystem.

In recent times, even some trusted banks have come RBI’s radar, prompting lenders to report their asset quality. Yes Bank, Lakshmi Vilas Bank, Punjab and Maharashtra Cooperative Bank (PMC Bank) are some recent names that emerged after probes.

When it comes to fixed deposit in banks under RBI radar, investors do not have much to worry as long as their investments are not more than a certain limit. The fixed deposit guarantee comes from RBI’s deposit insurance system that protects your FDs in case of bank failure or default.

All banks in India, including nationalised and private banks, are covered under RBI’s Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961

DICGC is regulated by RBI. It was introduced to safeguard the interest of common man. If a bank has elected for DICGC coverage, depositors’ funds held in it are protected up to a limit of Rs 5 lakh.

Suppose if you have any fixed deposit in a bank covered by DICGC rule, you could be assured up to a maximum Rs 5 lakh (including principal and interest) held till the date of liquidation/cancellation of bank’s licence or the date on which the scheme of amalgamation/merger/reconstruction comes into force.

You can reach out to your bank for DICGC Accreditation certificate to ensure that the bank is covered under the policy for fixed deposit guarantee.

Disclaimer: The above content is for informational purposes only. Please consult your financial advisor before investing.