Can Indian banks sink like America? How secure is your money?

Indian Bank: On the one hand, the US IT companies are under pressure, on the other hand, there is a fear of layoffs, on top of which this bank is sinking. Will it spread to the Indian banking system? Thinking questions

The economy collapsed overnight, with America reeling from bank failures. That fear has already spread to other countries of the world. The review is going on as to how much danger the depositors may face if such an incident happens in India like America. The collapse of America’s ‘Silicon Valley Bank’ has created panic around the world. Another bank named ‘Signature Bank’ of America has sunk within 48 hours due to that fear. There is this juju about what is going to happen in the future, besides the financial year is also going to end, so one rule after another is coming forward. All in all, the economic situation is now occupying the news headlines.

The time is 2008. ‘Lehman Brothers’ went bankrupt due to the ‘subprime’ crisis in America. However, the effects of that incident have already passed. Again, after 15 years, the ‘Silicon Valley Bank’, ‘Signature Bank’, dipped. On the one hand, the US IT companies are under pressure, on the other hand there are fears of layoffs, on top of that the bank collapse. Will it spread to the Indian banking system? Thinking about these questions.

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The banking system all over the world is one where depositor panic plays a major role. Once depositors begin to fear that the money deposited in the bank is not safe at all, that everything can be damaged at any moment, then they will suffer from a lack of security. And the marriage will also avoid depositing more money in the bank, thereby making it very difficult for the banking system to continue doing business. Because, once panicked depositors start withdrawing their money, bank failure is inevitable. Just as happened with American Silicon Valley and Signature Bank.

Although US President Joe Biden has already assured people that their savings are safe. Even the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) have guaranteed in their joint announcement that the bankruptcy of Silicon Valley Bank will not harm taxpayers. But what if such a situation happens in the case of Indian banks?

DICGC or Deposit Insurance and Credit Guarantee Corporation, an RBI affiliate, provides insurance coverage for Indian banks. Depositors are paid up to a maximum of Rs 5,00,000 per bank, which includes fixed deposits, savings accounts, recurring deposits and current accounts, if the bank is in distress in any way. Here, DICGC policy insures both interest and principal.

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Excluded from these rules are, namely – any Central and State Government deposits, inter-bank remittances, State Land Development Bank deposits with State Cooperative Banks, any amount due as a result of payments made outside India, and prior approval by the Reserve Bank of India by the company. Any amount expressly exempted from

How to know if your bank is covered by DICGC?

While designating banks as insured banks, DICGC also provides them with printed flyers outlining the security that the Corporation provides to their customers. If a person has money in more than one bank, the insurance coverage is applied to the deposits in each bank separately.

However, as this matter comes up, one thing that is being repeatedly said in expert circles is that banks in India are not as industry-centric as America. Banks in India are mainly dependent on small depositors. They never come together to withdraw money from the bank. Not only that, none of the banks in India pour a large portion of their deposits into government bonds. As a result, no matter how much the interest rate is increased by the Reserve Bank, overnight bank collapse is rare in India, experts said. So all the insurance related documents without worrying unnecessarily. Depositing money in a bank’s fixed, savings or savings account is usually not a big risk.

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