DICGC Deposit Insurance 2026: How the ₹5 Lakh Cover on Your Bank FD and Savings Account Actually Works

By Nitish Bharadwaj · Published Jul 19, 2026 · 6 min

DICGC insures bank deposits — savings, current, FD, and RD combined — up to ₹5 lakh per depositor per bank, raised from ₹1 lakh in 2020. Most depositors don't realise this cap applies across all accounts at one bank, not separately to each. Since a 2021 law change, DICGC must pay depositors within 90 days of a bank being placed under RBI restrictions, versus the years some earlier depositors waited. This guide covers how the limit is calculated, what a bank failure looks like, and how to structure larger deposits safely.

Every rupee you hold in an Indian bank — savings account, current account, fixed deposit, recurring deposit — is insured. But the cover tops out at ₹5 lakh per depositor per bank, combined across every account you hold there, not per account and not per branch. Most depositors only discover how this limit actually works after a bank runs into trouble.

What DICGC Actually Insures

The Deposit Insurance and Credit Guarantee Corporation (DICGC) is a wholly-owned subsidiary of the RBI that insures deposits at every commercial bank operating in India — public sector, private, foreign, regional rural, and small finance banks — as well as cooperative banks in states that have adopted the necessary legislation. Coverage applies automatically the moment you open an account; there's no separate premium to pay or form to fill, since the insured bank pays the premium to DICGC on your behalf. The insured amount is ₹5 lakh per depositor per bank, covering both principal and accrued interest combined, raised from ₹1 lakh in the 2020 Union Budget — the first increase since 1993.

How the ₹5 Lakh Limit Is Actually Calculated

The part that trips up most depositors: the ₹5 lakh cap isn't per account or per branch — it's the total of every deposit you hold at one bank, in the same right and the same capacity, added together. A savings account, a fixed deposit, and a recurring deposit at the same bank, all in your name, are aggregated into one ₹5 lakh limit, not insured separately. Deposits held across different branches of the same bank are aggregated too — moving money between branches of one bank does nothing to increase your cover. The only way to get a fresh ₹5 lakh limit is to hold the deposit at a genuinely different bank, or in a genuinely different ownership capacity, such as a joint account held with your spouse rather than your individual account.

What Happens When a Bank Actually Fails

When the RBI places a bank under an All-Inclusive Direction — freezing or restricting withdrawals because of financial stress, as it has done with several urban cooperative banks in recent years (see our guide to co-operative bank FD safety) — depositors used to face a long wait for their money, sometimes years, while resolution played out. That changed with a September 2021 amendment to the DICGC Act, which added Section 18A: once a bank is placed under such restrictions, it must submit a list of outstanding deposits to DICGC within 45 days, and DICGC must pay out the insured amount to each depositor within 90 days of the restriction being imposed. In most cases you don't need to file a separate claim — the bank's administrator handles the depositor list, and you're typically asked only to submit a signed willingness form along with KYC documents to receive your payout. A merger — like Lakshmi Vilas Bank into DBS Bank India, or PMC Bank into Unity Small Finance Bank — is a different, much less disruptive scenario for your FD than an outright failure; our guide to what happens to your FD in a bank merger vs failure walks through both cases side by side.

Company FDs and Post Office Deposits Aren't DICGC-Covered at All

DICGC cover is specific to bank deposits — it does not extend to corporate or company fixed deposits, which rely entirely on the issuing company's own credit rating and repayment capacity, as covered in our company FD vs bank FD risk comparison. Post office instruments like the Post Office Time Deposit sit on the other end of the safety spectrum — they carry a full sovereign guarantee from the Government of India, backing the entire deposit regardless of size, rather than a ₹5 lakh cap. Small finance banks advertising 8-9% fixed deposit rates, such as those in our small finance bank FD rates roundup, carry the exact same ₹5 lakh DICGC cover as SBI or HDFC Bank — the higher rate reflects the bank's own funding needs and credit profile, not extra government-backed safety.

A Practical Strategy for Deposits Above ₹5 Lakh

If your total bank deposits at one institution exceed ₹5 lakh, the straightforward fix is to split the surplus across two or three different banks rather than concentrating it, since each bank carries its own independent ₹5 lakh limit. For money you want fully protected regardless of amount, sovereign-backed instruments such as SCSS for senior citizens or the Post Office Time Deposit are worth weighing against a high-rate small finance bank FD sitting near or past the insured limit. None of this is a reason to avoid small finance banks or newer private banks outright — DICGC cover is identical across every insured bank — but it is a reason not to let one bank's attractive rate pull your entire surplus into a single ₹5 lakh-plus exposure without a plan.