IS YOUR FIXED DEPOSIT SAFE 

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Many of our people work  hard in Goa, other parts of India and in different countries and particularly those who are working on the dusty shores of Middle East.  

The hard work, harsh weather (where temperatures in summer shoot up to 45+ degrees centigrade) the treatment endured by those who take up various types of jobs to sustain their families back home have to sacrifice their lives in someone elses country because of lack of opportunities etc at home where keeping the roof over their heads is next to impossible. 

The painfully earned money is sent to Goa or other parts of India where their families reside and if there should be any extra money left in their kitty they are very careful not to waste a cent/fils/paise etc. The money along with bonus if any are then placed on a Term Deposit (known as Fixed Deposit as well) to ensure higher yield and the thought that money in the bank is very safe.    

The point that I am trying to make here is the fact that most people are unaware that the hard earned money kept with any bank in the world is not secure and that applies to Term Deposit or Fixed Deposit because should  the bank where your savings and TD/FD  go belly up, your banking instrument has no guarantee of protection. This is something that is not known to layman and naturally the banks do not tell you that at the time of opening an account or placing a big deposit.  

The notion that my money is safe in the bank may not be true and therefore one needs to take into account the saying “Do not place all your eggs in one basket” 

The rate of interest that is offered by a bank should not be the only criterion to deposit your money, enquiries need to be made on the financial standings of the bank, their balance sheet, their assets and liabilities previous year/s performance etc Guidance from an independent Financial Advisor and/or Financial Planner should not be out of sight.  

Money does not grow on trees. 

Indians, in general, are known as people who like to put a portion of their earnings into savings and many of us opt to take the Fixed Deposit route to secure and earn on our savings. Fixed Deposits are generally considered to be fairly low-risk investments and people rarely have major concerns about getting their money back from the bank. All the same, what if something were to happen to the bank? It could close or have its license cancelled, or be liquidated. What would happen to your Fixed Deposit then?

Here are few Fixed Deposit facts to help allay your fears.

Effective regulation by the Reserve Bank of India (RBI) has ensured that your deposits are safe. The RBI has made Deposit Insurance compulsory for all banks and no bank can withdraw from it.

What Does This Mean?

This means that no matter what happens to your bank, whether it closes down, is liquidated, undergoes a reconstruction or amalgamation or is merged with another back, your money is still protected. Each depositor is insured for up to Rs. 1 Lakh for Savings, Fixed, Current and Recurring Deposits and this includes both the principle and the interest amount accrued.

Are Public Sector Banks Safer Than Private Sector Ones?

All banks in India, whether Public or Private, Co-operative or Foreign Banks (with branches in India), are covered by the Deposit Insurance. Given this, no one bank is safer than another.

What Happens If You have More Than Rs. 1 Lakh Worth of Deposits?

The limit for the sum of the deposit insured is Rs. 1 Lakh per person for any given bank. Even if you have your deposits in different branches of the same bank, they will be aggregated for the purpose of the insurance cover which will only extend up to this amount (Rs. 1 Lakh).

However, to protect yourself better, you can increase your Deposit Insurance cover by depositing your money in different banks. As long as the deposits are in separate banks, the Deposit Insurance will apply separately.

So, if you were ever worried that your money was at risk, rest assured, the RBI’s got you covered.

Diversify  Your Fixed Deposits

The above write up is in no way meant to give you financial advice. It is purely an exercise to heighten your awareness. 
Your comments welcome. 

 

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