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.