Good morning [%first_name |Dear Reader%],

A few days ago, a small finance bank (SFB) sent me a Whatsapp message. It was offering a neat 9.1% on its fixed deposits (FDs) for a 5-year tenure; senior citizens could get 9.6%. These are among the best rates offered for bank deposits in many years. To be honest, it’s a great time to be an FD investor in India. Banks are falling over each other to attract depositors and SFBs are leading the charge on interest rates, as always. 

But it was not just the high rates in the colourful advertisement that got my attention. More than half the real estate in the ad was dedicated to the DICGC insurance cover on bank deposits. DICGC is short for Deposit Insurance and Credit Guarantee Corporation, a wholly owned subsidiary of Reserve Bank of India (RBI), the country’s central bank. 

The DICGC insures bank deposits—so, if a bank goes bust, the corporation makes good depositors up to Rs 5 lakh (US$6,050); the insurance amount was increased from Rs 1 lakh (US$1,200) to Rs 5 lakh in 2020. Also, in 2021, the government amended the DICGC Act to make good depositors of failed banks within 90 days; earlier it could take years for settlements to be made.