What happens if your bank collapses in India: Rules for savings accounts and FDs
India TV NewsThe sudden collapse of a bank can be a distressing event for depositors, especially in a country like India, where millions of people entrust their savings to various banks. If your total balance exceeds ₹5 lakh, only ₹5 lakh will be refunded in case of the bank’s collapse, and the remaining amount will depend on the liquidation process. Big Banks vs. Small Banks While the rules for deposit insurance are the same across the banking system, the stability of the bank can affect how quickly depositors can access their funds. In the case of big banks: Public sector banks, like State Bank of India, Bank of Baroda, and others are considered relatively safe due to their government backing. If a small bank collapses, the liquidation process may take longer, and in some cases, depositors may face challenges accessing their funds promptly, even though the ₹5 lakh insurance cover is available.
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