Depositing Cash In Your Bank Account? Don't Do THIS Or You Will Lose Money - Check RBI Rule

Safe Cash Deposit Limit In Banks: The Reserve Bank of India (RBI) on Friday imposed certain restrictions on New India Co-operative Bank Limited (NICB), Mumbai, barring it from carrying out financial operations without prior approval. This also prohibits the customers from withdrawing money from their accounts. According to the RBI notice, "Considering the bank's present liquidity position Bank has been directed not to allow withdrawal of any amount from savings bank or current accounts or any other account of a depositor but is allowed to set off loans against deposits subject to the conditions stated in the RBI Directions."

However, to safeguard consumer's interests, the RBI has launched Deposit Insurance and Credit Guarantee Corporation (DICGC). This is beneficial for the poor and middle-class who deposit their hard-earned money with banks. If you are not aware, let's tell you that if a financial institution goes bankrupt, then the customers' money with the bank also faces risk. To safeguard customers from this shock, the RBI has brought the DICGC. 

What Is DICGC?

All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are insured by the DICGC. According to the DICGC, a customer gets deposit insurance worth up to Rs 5 lakhs. This means the affected customer will get their full money back up to Rs 5 lakhs. However, if a depositor has more than Rs 5 lakh with the bank, he/she will get only up to Rs 5 lakhs.

Under the DICGC, each depositor in a bank is insured up to a maximum of Rs 5,00,000 (Rupees Five Lakhs) for both principal and interest amount held by him in the same right and same capacity as on the date of liquidation/ cancellation of bank's licence or the date on which the scheme of amalgamation/merger/reconstruction comes into force.

The DICGC insures principal and interest up to a maximum amount of Rs five lakhs. For example, if an individual had an account with a principal amount of 4,95,000 plus accrued interest of 4,000, the total amount insured by the DICGC would be 4,99,000. If, however, the principal amount in that account was five lakhs, the accrued interest would not be insured, not because it was interest but because that was the amount over the insurance limit.

All funds held in the same type of ownership at the same bank are added together before deposit insurance is determined. If the funds are in different types of ownership or are deposited into separate banks they would then be separately insured. In fact, if a person has four different accounts with the same bank in different ownership, then all will be insured separately. 

Mistakes To Avoid: Keep Your Money Safe

First and foremost, it's advisable for people to do banking with only reputed and big banks like the State Bank of India or Punjab National Bank. It's best to avoid small cooperative banks. Second, if you have Rs 7 lakh cash with you, it's best to keep Rs 2 lakh with you and deposit Rs 5 lakh with the bank. Additionally, it's best to keep the money below Rs 5 lakh limit in your account and for this, one can use a family member's account as well.