Are Fixed Deposits in Major Banks Truly Safe? Uncover the 5 Lakh Rule's Reality
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FDs in Large Banks: Uncover the Truth About the 5 Lakh Insurance Rule
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News18•20-02-2026, 07:10
FDs in Large Banks: Uncover the Truth About the 5 Lakh Insurance Rule
•Fixed Deposits (FDs) are considered the safest investment in India, but their safety is determined by deposit insurance rules, not bank size.
•The Deposit Insurance and Credit Guarantee Corporation (DICGC) provides insurance coverage of up to 5 lakh rupees per depositor per bank, including principal and interest.
•For amounts exceeding 5 lakh rupees in a single bank, only 5 lakh rupees are insured; the rest faces uncertainty in case of a bank crisis.
•Experts recommend distributing large sums across multiple banks, keeping each FD below 5 lakh rupees to ensure full insurance coverage.
•Small finance banks often offer higher interest rates (0.2% to 0.7% more) and are also covered by DICGC insurance, making them a viable option for diversified investments.
