Bank Shuts Down:
Many people prefer to keep their savings in banks as it is considered safer than keeping money at home. However, when a bank faces financial trouble or shuts down, customers often worry about losing their deposits. The good news is that there are rules in place to protect your money to a certain limit.

Bank Shuts Down:

In India, all bank deposits are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC). This means that if a bank fails, each customer’s deposits — whether in savings, current, or fixed deposit accounts — are insured up to ₹5 lakh. This limit applies to the total balance a person holds in one bank, including both principal and interest.

If your deposit amount is more than ₹5 lakh, the extra amount will not be covered under this insurance. In such cases, the remaining amount can only be recovered after the bank sells its assets, which may take a long time.

When a bank closes, the Reserve Bank of India (RBI) and DICGC issue a notification. Customers then have to file a claim to get their insured amount. This claim process is available both online and offline. To apply, customers need to submit essential documents like their passbook, account number, and ID proof. Once verified, the insured amount (up to ₹5 lakh) is credited back to the depositor’s account.

Experts suggest that people who have large savings should divide their money between multiple banks. By spreading deposits across different banks or accounts, customers can ensure that each account is protected by separate insurance coverage.

This safety measure helps people protect their hard-earned money and stay prepared for any unexpected banking crisis.

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