Deposit insurance in India covers ₹5,00,000 per depositor per bank. That figure includes interest, not just principal. So a ₹4,95,000 deposit with ₹8,000 of accrued interest is covered to ₹5,00,000 and no further. The cover is provided by the Deposit Insurance and Credit Guarantee Corporation, a wholly owned subsidiary of the RBI. The bank pays the premium in full. You pay nothing and you do not have to apply.
The number most people get wrong is the unit. The limit is per bank, not per account and not per branch. Five accounts at one bank are one ₹5 lakh cover.
What exactly does the ₹5 lakh cover?
| Rule or limit | Figure | Applies to | Source |
|---|---|---|---|
| Cover per depositor per bank | ₹5,00,000 | Principal and interest combined, in the same right and same capacity | DICGC |
| Banks covered | All of them | Commercial banks, branches of foreign banks in India, local area banks, regional rural banks and co-operative banks | DICGC |
| Deposits not insured | No cover | Central and State Government deposits, foreign government deposits, inter-bank deposits, and deposits received outside India | DICGC |
| Premium | Borne entirely by the insured bank | Depositor pays nothing | DICGC |
| Payout after All-Inclusive Directions | Within 90 days | Depositors of a bank placed under AID by the RBI | DICGC Act, Section 18A, in force from 1 September 2021 |
| Bank’s deposit list | Within 45 days of AID | The bank must file it; DICGC verifies in 30 days and pays within 15 days of verification | DICGC Act, Sections 18A and 16 |
All figures above are as published by DICGC and read on 6 September 2026.
How does “same right and same capacity” change your cover?
This phrase does most of the work, and almost nobody explains it. Accounts you hold in the same capacity at one bank are added together for the ₹5 lakh limit. Your savings account, your current account and your fixed deposits at that bank are one pool.
Accounts held in a different capacity are insured separately. An account you hold alone, an account you hold as a partner in a firm, and an account you hold as a guardian for a minor are different capacities. Joint accounts are treated by the combination of holders and the order of names. So two joint accounts with the same two people in the same order are one cover. Reverse the order and they are treated separately.
This is a legitimate way to raise family cover at one bank. It is also easy to overdo. If the structure only exists on paper, it will not survive scrutiny at claim time.
What happens when the RBI restricts a bank?
The RBI can place a stressed bank under All-Inclusive Directions. Withdrawals are capped, often at a very low figure. Before September 2021, insured depositors of such a bank had to wait for liquidation, which could take years.
Section 18A changed that. The bank must submit a list of every depositor’s outstanding balance within 45 days of the directions. DICGC verifies it within 30 days and pays within 15 days of finishing that check. The total, from the date of the RBI order to the money reaching you, cannot exceed 90 days.
That is the single most important thing to know about this cover. It is no longer a promise contingent on liquidation. It is a dated obligation.
Where deposit insurance does not help you
Say the uncomfortable part plainly. The ₹5 lakh limit has not moved since 2020, while deposit balances have. A retired household keeping ₹40,00,000 at one small bank for an extra percentage point is insured on an eighth of it. The extra interest is visible every quarter. The uninsured ₹35,00,000 is invisible until it is not.
The cover also does not extend past bank deposits. Company fixed deposits, NBFC deposits, mutual funds, bonds and market investments carry no DICGC cover at all. Neither does money you hold in a payments wallet. If a high advertised rate is the reason you moved money, read the small finance bank deposit rates page and check where the rate is coming from.
The workable fix is boring. Split large deposits across banks so no single bank holds more than the insured amount, and stagger the maturities. Our pages on FD laddering and the best FD rates cover how to do that without giving up much yield. If a bank is refusing to act on a deposit complaint, the banking ombudsman route is free.
Frequently asked questions
Is ₹5 lakh per account or per bank?
Per depositor per bank. Every account you hold in the same right and same capacity at one bank is added together, across branches, and the total is insured up to ₹5,00,000 including interest. Two banks means two separate covers of ₹5,00,000 each.
Are co-operative bank deposits insured?
Yes. DICGC covers co-operative banks on the same terms as commercial banks, and most Section 18A payouts so far have been to depositors of co-operative banks. Co-operative societies that are not licensed banks are a different thing and are not covered.
Do I need to claim, or does DICGC pay automatically?
You do not file a claim with DICGC. The bank files the list of depositors. You may be asked by the bank to confirm your willingness to receive the payment and your account details. Keep your KYC and mobile number current, because that is how you will be contacted.
Is the interest on my fixed deposit covered too?
Yes, but inside the same ₹5,00,000 ceiling. Principal and interest are added, then the limit is applied. If your principal alone is ₹5,00,000, the accrued interest is not additionally insured.
Sources
- DICGC, A Guide to Deposit Insurance: dicgc.org.in
- DICGC, payment to depositors of banks under All-Inclusive Directions (Section 18A): dicgc.org.in
Related reading
Bank Charges Compared
What your bank can charge for ATM use, SMS alerts, debit cards, cheque returns and low balance — and which of those the RBI actually caps.
17 Sep 2026 · 5 min
Bank Holidays in India
Which days banks close, why the list differs by state, and what still works when a branch is shut.
6 Sep 2026 · 5 min
Bank Locker Charges & Rules
What a bank locker costs, how the rent is built, and the RBI rule that caps the bank's liability at 100 times the annual rent.
7 Sep 2026 · 6 min