Tuesday, April 5, 2011

All deposits in Indian banks are pre-insured

Every time you panic and run to get your deposits out of the bank, think again. All Indian banks which are under the supervision of the RBI cannot go under. In the event of an amalgamation, liquidation and reconstruction, all small depositors are safe. They are entitled to a repayment of all their deposits to the tune of Rs.1, 00,000.

And this is a compulsory for all banks working in India.  All commercial banks, regional rural banks and even co-operative banks in certain states are also included.

Deposit Insurance is provided by only one organization in the country. Deposit Insurance and Credit Guarantee Corporation (DICGC) will make sure that at least Rs.1,00,000 can be withdrawn by the depositor per account.

What we would suggest would be spread your deposits in various banks. Thus the limit for withdrawal increases.

Also getting a proper Insurance policy to create a back up in case of emergencies.

Indian banks have some inherent qualities when it comes to their assets. All banks are required to have a Cash Reserve Ratio of 4.75%. Also under the Statutory Liquidity Requirements (SLR) the banks have to deposit 25% of their deposits in Central Government Paper. Thus almost 30% of a bank’s deposits are very liquid.

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