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Ever wondered what if your bank runs out of funds? Who would lend you money and how? In such cases, there’s a little help that the RBI offers in the form of insurance on Bank Deposits. Let’s look into it in a little detail.
The Insurance on Bank Deposits is a protection cover against the losses that might occur if the bank fails or loses its financial ability to pay back to its depositors.
This is an extremely helpful policy as it prevents individuals and especially private business firms from losing their savings or capital. It also prevents the situation of panic and helplessness among the depositors in case a bank declares its solvency.
Although your money is insured, this does not mean that it gives you the freedom to take higher risks. You still need to be very careful before handing over your life’s earnings to any bank, as we all know a little precaution is essential at every step.
Here are a few things you need to keep in mind about insurance on bank deposits:
Well, this is because the insurance premium for this cover is borne entirely by the bank and is part of their responsibility to ensure a safe banking experience for their customers. Even after the bank gets liquidated, it is its responsibility to make sure each and every depositor gets the compensation on time. In no case, there is direct contact between the depositors and the RBI.
The liquidated bank prepares a claim list and submits it to the DICGC. Only after two months from the date of receipt, the depositor is liable to receive the claim which is reimbursed by the liquidated bank.
Now you can take a sigh of relief as you know that your bank has a backup! But always remember your money is your responsibility and it is you who decides its fate, Happy Banking!