DICGC deposit insurance explained: How the 5 lakh limit works

The Deposit Insurance and Credit Guarantee Corporation protects your money if your bank fails. You get up to ₹5 lakh back across all your accounts in that bank. This covers both your main balance and any unpaid interest. Learn how the limit works and what happens to neobank accounts.

By Qrates research desk · 2026-10-27

Quick answer: How DICGC deposit insurance works

The Deposit Insurance and Credit Guarantee Corporation refunds depositors if a bank fails.
The maximum insurance limit is ₹5 lakh per person, per bank.
This ₹5 lakh limit includes your principal amount and any unpaid interest.
The DICGC claim process takes exactly 90 days to pay you if the Reserve Bank of India restricts your bank.

What DICGC deposit insurance is

The DICGC is a wholly owned subsidiary of the Reserve Bank of India. It exists to refund depositors when a bank cannot return their money.

Which banks are covered under DICGC

The insurance covers all commercial banks, small finance banks, payments banks, and cooperative banks. The bank must be licensed by the RBI to qualify for this protection. You can check banking apps and neobanks to see which licensed bank holds your money.

What types of deposits are covered

The cover applies to almost all bank deposits. This includes savings accounts, fixed deposits, current accounts, and recurring deposits. It does not cover money kept in mutual fund or wealth apps or stock broking accounts.

Who pays the insurance premium

The bank pays the DICGC premium to keep your money insured. Depositors do not pay anything for this cover. You will never see a DICGC fee taken from your account.

How the limit works with a rupee example

The ₹5 lakh limit applies to all your accounts in the same bank combined. The DICGC does not give you ₹5 lakh for your savings account and another ₹5 lakh for your fixed deposit.

Adding savings and fixed deposits together

The corporation adds up every rupee you hold across all accounts in the same bank combined. If you have a ₹4 lakh fixed deposit and ₹1.5 lakh in a savings account, your total balance is ₹5.5 lakh. The insurance will only cover ₹5 lakh of this total.

How unpaid interest affects your limit

Interest is counted first before the principal amount. If your principal is ₹4.8 lakh and your unpaid interest is ₹30,000, your total balance is ₹5.1 lakh. You will receive exactly ₹5 lakh and lose the remaining ₹10,000.

Example: A balance of ₹6 lakh

Imagine you have exactly ₹6 lakh in a single bank when it fails. The DICGC will pay you the maximum limit of ₹5 lakh. You will lose the remaining ₹1 lakh.

What to check in your own case

You can verify if your money is protected before you open an account.

Checking the official DICGC bank list

You can search for your bank on the official DICGC website (dicgc.org.in). The site has a register of all insured banks. If a bank is not on this list, your money there has no DICGC protection.

How neobank DICGC cover works

Neobanks do not hold banking licences themselves. They partner with licensed banks to store your money. Your money is covered under the partner bank's DICGC insurance, not the neobank itself.

Joint account DICGC limits

Single accounts and joint accounts are treated as separate entities. If you hold a single account and a joint account in the same bank, each gets a separate ₹5 lakh limit. The joint account must have a different combination of account holders to qualify.

The 90-day DICGC claim process

When a bank runs out of money, the RBI steps in to stop regular operations. This triggers a strict timeline.

Step 1: RBI restricts the bank

The process starts the day the RBI places a bank under All Inclusive Directions. This means the bank can no longer lend money or allow normal withdrawals. The RBI announces this action on its official website (rbi.org.in). If you face issues with a bank, you can learn how to complain to the RBI Ombudsman for further guidance.

Step 2: The bank submits depositor details

The failing bank has 45 days to send a complete list of depositors to the DICGC. This list includes every customer and their exact balance. You do not need to submit a claim form yourself at this stage.

Step 3: DICGC pays the money

The DICGC then has 45 days to verify the claims. It credits the money to an alternate bank account that you provide. The entire process from the RBI restriction to the final payout takes exactly 90 days.

Common mistakes depositors make

People often miscalculate their insurance cover by misunderstanding how banks group accounts.

Assuming the limit is per branch

Deposits across different branches of the same bank are added together. The limit is not ₹5 lakh per branch. If you have ₹3 lakh in a Mumbai branch and ₹3 lakh in a Delhi branch of the same bank, your total cover is still only ₹5 lakh.

Forgetting about neobank partner limits

Neobank balances share the limit with any direct accounts you have at their partner bank. If you use a neobank and also have a direct savings account with its partner bank, both balances are added together. You only get a single ₹5 lakh limit for the combined total. You can compare insurance apps to see if your policy provider offers similar transparency regarding coverage.

FAQs

What happens if a bank fails in India?

The RBI steps in and restricts withdrawals from the failing bank. This triggers the DICGC insurance process. The corporation then refunds depositors up to ₹5 lakh within 90 days.

Is my 5 lakh safe in bank?

Yes, balances up to ₹5 lakh are protected by DICGC insurance. This limit includes both your principal amount and any unpaid interest. The bank must be an RBI-licensed entity to have this cover.

Are neobanks covered by DICGC?

Neobanks are not covered directly because they do not have banking licences. The licensed partner banks that hold your money are covered. You share your ₹5 lakh limit across all accounts held with that specific partner bank.

Does DICGC cover both FD and savings account?

Yes, the insurance covers savings, fixed, current, and recurring deposits. The balances of all these accounts are added together. The maximum payout for the combined total is ₹5 lakh.

How to check if my bank is registered with DICGC?

You can check the official list of insured banks on the DICGC website (dicgc.org.in). The register lists every commercial, small finance, payments, and cooperative bank that is covered.

The short version

The DICGC protects up to ₹5 lakh per person in each licensed bank.
This limit applies to all your savings, current, fixed, and recurring deposits combined.
Unpaid interest is counted towards the ₹5 lakh limit before the principal amount.
If the RBI restricts a bank, the DICGC takes exactly 90 days to refund depositors.
Neobank users are covered by the DICGC insurance of the underlying partner bank.

Sources

Disclaimer

Qrates is an information directory. It takes no commission from any company listed and does not recommend products. Figures are taken from the sources named and dated, and they change; check the company's own page before you decide. This is not investment, credit, insurance or tax advice for your situation.