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Do you have deposit insurance?

business Updated: Nov 02, 2008 20:20 IST
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Investors are worried about their deposits or money lying with their banks in recent times. Though there is no need to panic as Indian banks have adequate financial strength and capital available with them to sail through this recession, the banking system provides the facility of deposit insurance that will ensure that the amounts deposited in the bank are guaranteed up to a specific limit.

Deposit insurance
Banks that have paid premium under this scheme will get the coverage of deposit insurance. All big and well-known banks pay insurance premium and hence their depositors are covered in the scheme. The limit for this kind of cover is Rs 1 lakh. This provides investors with the reassurance that their money is safe with the bank.

Limit details
An investor should know how much money is there in his or her account or deposit. Thus individuals will have to take the sum total of the investment in a certain bank to ascertain the extent of their exposure with the said bank. If the person wants to reduce their risk then the simplest way is to spread the money around banks where the total amount does not cross the Rs 1 lakh figure. This is a plausible thing when the total amount is not very large but is difficult to implement when the deposits are large in size because of administrative cost and effort.

Increasing limit
Several countries across the world have increased their deposit insurance amount. This means that a higher amount would be covered under the facility. In India too there has been some discussion on this issue but the actual situation will change only if and when the details are finalised. Till that time the investor will have to work within the existing figures and the system available.