- Date : 20/03/2023
- Read: 2 mins
The Deposit Insurance and Credit Guarantee Corporation (DIGDC) insures Indian bank deposits up to Rs. 5 lac/depositor
Silicon Valley Bank (SVB) collapse has been nothing short of scary. SVB invested in US Treasuries with a short-term view. However, it began investing long term in getting a higher yield. The plan backfired when the US Fed began increasing interest rates. SVB's long-term portfolio started dropping in market value, followed by downgrades, leading to a speedy security sale. The news spread quickly, and everyone learned that the bank was troubled and in the wake of insolvency. Depositors panicked and withdrew their money.
Indian Deposit Insurance
The Deposit Insurance and Credit Guarantee Corporation (DIGDC) insures Indian bank deposits up to Rs. 5 lac/depositor. Each bank has branches, and the total insurance is Rs. 5 lac. However, you will be insured separately if you have accounts in different branches. It means you will only get Rs. 5 lac as insurance if you keep Rs. 15 lacs in one bank. However, you might get Rs. 15 lacs as insurance if you keep Rs. 5 lacs in three branches.
How To Choose Your Bank?
The Reserve Bank of India (RBI) handles the banking system of our country spectacularly. It ensures the banks are properly regulated and avoids major shocks during the global crisis. Mostly, the Indian banks are safe, and the RBI takes proactive measures to keep it that way. However, that might not be the same for every bank. The RBI has selected three systematically important banks (SIBs). These are HDFC Bank, ICICI Bank, and SBI. In simpler terms, these three are huge and massively crucial for our economic system. Note that these three are identified as the most crucial, and others aren't bad.
Depositing Large Sums in Banks
You must do the following to put over Rs. 5 lacs in banks. Put around 60-70% of your money in SIBs and the rest in other banks. It means that you don't put all your eggs in one basket. Spreading your money across banks is crucial. The safety of your funds is essential, and being greedy for a few basis points does not make sense.
Conclusion
Many people invest in other banks for higher return rates. However, it means the bank is providing a higher incentive as it is riskier. However, you should not avoid banks. You must be careful of unusually higher interest rates and limit the deposits. You must keep your money with reputed names that have AAA ratings.
Silicon Valley Bank (SVB) collapse has been nothing short of scary. SVB invested in US Treasuries with a short-term view. However, it began investing long term in getting a higher yield. The plan backfired when the US Fed began increasing interest rates. SVB's long-term portfolio started dropping in market value, followed by downgrades, leading to a speedy security sale. The news spread quickly, and everyone learned that the bank was troubled and in the wake of insolvency. Depositors panicked and withdrew their money.
Indian Deposit Insurance
The Deposit Insurance and Credit Guarantee Corporation (DIGDC) insures Indian bank deposits up to Rs. 5 lac/depositor. Each bank has branches, and the total insurance is Rs. 5 lac. However, you will be insured separately if you have accounts in different branches. It means you will only get Rs. 5 lac as insurance if you keep Rs. 15 lacs in one bank. However, you might get Rs. 15 lacs as insurance if you keep Rs. 5 lacs in three branches.
How To Choose Your Bank?
The Reserve Bank of India (RBI) handles the banking system of our country spectacularly. It ensures the banks are properly regulated and avoids major shocks during the global crisis. Mostly, the Indian banks are safe, and the RBI takes proactive measures to keep it that way. However, that might not be the same for every bank. The RBI has selected three systematically important banks (SIBs). These are HDFC Bank, ICICI Bank, and SBI. In simpler terms, these three are huge and massively crucial for our economic system. Note that these three are identified as the most crucial, and others aren't bad.
Depositing Large Sums in Banks
You must do the following to put over Rs. 5 lacs in banks. Put around 60-70% of your money in SIBs and the rest in other banks. It means that you don't put all your eggs in one basket. Spreading your money across banks is crucial. The safety of your funds is essential, and being greedy for a few basis points does not make sense.
Conclusion
Many people invest in other banks for higher return rates. However, it means the bank is providing a higher incentive as it is riskier. However, you should not avoid banks. You must be careful of unusually higher interest rates and limit the deposits. You must keep your money with reputed names that have AAA ratings.
