Generally people deposit their money and their savings in bank accounts only. Apart from this, people also invest their savings in bank FD and RD. But imagine that you come to know that the bank in which you have deposited your hard-earned money over the years has gone bankrupt. In such a situation, the first question that arises among people is whether their money will be safe or not. Regarding this fear, the important information given by the Reserve Bank of India and its subsidiary organization Deposit Insurance and Credit Guarantee Corporation comes in handy. In such a situation, let us now tell you that if the bank sinks, how much money do the customers get and what is the rule of RBI?

What is RBI’s rule in case of bank collapse?

According to RBI and DICGC data, by March 2025, about 97.6 percent of bank accounts in the country come under insurance cover. This means that even if a bank goes bankrupt, most account holders are guaranteed to get their deposits back. As per RBI rules, DICGC provides insurance cover up to a maximum of Rs 5 lakh to every depositor in a bank. This includes savings account, fixed deposit, recurring deposit and current account. Apart from this, let us tell you that this limit of insurance cover is also decided on per depositor and per bank basis. Bankruptcy process is applicable for amounts more than Rs 5 lakh. In this, an attempt is made to return the money to other depositors by selling the bank’s assets, but this may take time.

Small depositors safe, large amounts at risk

According to RBI rules, even though 97.6 percent of the accounts are insured in terms of number of accounts, only about 41.5 percent of the total deposited amount is covered under insurance cover. If we understand it in simple words, the money of small depositors is safe to a great extent, but a large part of the accounts in which large amounts are deposited remain in danger.

Where do you get money from if a bank collapses?

If a bank is not in a position to return the money of its depositors, then RBI can impose moratorium on it or merge it with another bank. At the same time, if the road is completely closed, the bank is also declared bankrupt. In such a situation, DICGC returns a maximum amount of up to Rs 5 lakh to the depositors from its insurance fund. This fund is prepared from the insurance premium taken from banks.

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RBI Actions on Baghat Urban Co-Operative Bank: Taking regulatory action, the Reserve Bank of India (RBI) has imposed strict restrictions on The Baghat Urban Co-operative Bank Limited, based in Solan, Himachal Pradesh. According to the instructions of the Central Bank, now this bank will neither be able to accept any new deposits nor will be able to issue new loans. Along with this, payment of bank liabilities has also been banned.

What are the instructions of RBI?

RBI said that without prior written permission the bank cannot give any new loan, accept new deposits nor fulfill its financial obligations. This step has been taken after serious financial irregularities came to light during the recent inspection.

According to the report of news agency PTI, considering the current cash position of the bank, RBI has set the withdrawal limit of customers at Rs 10,000. However, RBI has given the relaxation that the bank can use the amount present in the customers’ accounts to adjust their outstanding loans.

What will happen to insurance coverage?

RBI also clarified that the bank’s depositors have insurance protection under the Deposit Insurance and Credit Guarantee Corporation (DICGC). According to this provision, each depositor will get an insured amount up to a maximum of ₹ 5 lakh, which will be decided as per the status and rights of his account.

The central bank also clarified that these restrictions do not amount to canceling the bank’s license. The bank will be able to continue its operations with limited conditions. This step of RBI has been taken with the aim of stabilizing the financial condition of the bank and protecting the interests of depositors.

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