Orlando Harmon
Yes Bank is an Indian private sector bank headquartered in Mumbai, founded in 2003 by Rana Kapoor and Ashok Kapur. The bank has a network of 1,198 branches and 1,287+ ATMs across 300 districts in India. In March 2020, the Reserve Bank of India (RBI) took control of Yes Bank due to its deteriorating financial position, which led to concerns about its deposits being insured. The Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI, provides insurance coverage for deposits in Yes Bank accounts, up to a maximum of ₹5 lakh per depositor. This insurance coverage applies to all types of deposits, including savings, fixed, current, and recurring deposits, across different branches of the bank.
| Characteristics | Values |
|---|---|
| Maximum Insurance Coverage | Rs. 5 lakh |
| Insurer | Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the Reserve Bank of India (RBI) |
| Coverage | All accounts of one depositor held with the same or different branches of the same bank |
| Types of Accounts Covered | Savings, fixed, current, and recurring deposits |
| Exceptions | Inter-bank deposits, deposits received outside India |
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What You'll Learn
- Yes Bank deposits are insured up to Rs 5 lakh by the DICGC
- The DICGC covers all deposits, including savings, fixed, current, and recurring
- Insurance coverage depends on ownership patterns and the number of deposits
- Salary account holders should transfer their accounts to another bank
- Joint accounts are treated separately and insured up to Rs 5 lakh each
Yes Bank deposits are insured up to Rs 5 lakh by the DICGC
Yes Bank is an Indian private sector bank, founded in 2003 and headquartered in Mumbai. The bank caters to retail customers, MSMEs, and corporate clients. In March 2020, the Reserve Bank of India (RBI) took over Yes Bank in a bailout provision.
It is important to note that the insurance coverage limit is applied separately to deposits in different banks. For example, if an individual has accounts in two different banks, each account will be insured separately up to Rs 5 lakh.
The DICGC insurance coverage also extends to joint accounts. In the case of a joint account, each account holder is considered a separate entity, and their deposits are insured independently up to Rs 5 lakh.
Additionally, the DICGC insurance covers both the principal and interest amounts up to a combined maximum of Rs 5 lakh. If the principal amount is Rs 5 lakh, the interest will not be covered.
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The DICGC covers all deposits, including savings, fixed, current, and recurring
Yes Bank is an Indian private sector bank headquartered in Mumbai, with a network of 1,198 branches and 1,287+ ATMs spread across 300 districts in India. In March 2020, the Reserve Bank of India (RBI) took over Yes Bank in a bailout provision, citing the bank's failure to raise new funding to cover its non-performing assets.
The Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the RBI, insures all bank deposits, including those in savings, fixed, current, and recurring accounts. This insurance scheme provides protection against bank failure and applies to almost all types of banks, including co-operative and regional banks.
The DICGC coverage limit was initially set at ₹1 lakh, but in 2020, it was raised to ₹5 lakh to enhance depositor protection in light of several high-profile bank failures. This means that if a bank fails or is liquidated, the DICGC will reimburse depositors up to ₹5 lakh of their deposits, even if the bank becomes insolvent. The process involves the bank's liquidator submitting claims on behalf of depositors to the DICGC, which then releases the insured amount after verification.
It is important to note that interbank and government deposits are not covered by the DICGC. Additionally, while the insurance scheme provides assurance to depositors, the compensation process can be delayed, as claims must be processed through the liquidator after bank failure.
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Insurance coverage depends on ownership patterns and the number of deposits
The Federal Deposit Insurance Corporation (FDIC) provides deposit insurance, which is backed by the full faith and credit of the US government. This insurance covers bank depositors against the loss of their insured deposits in the event that an FDIC-insured bank fails. Importantly, the amount of FDIC insurance coverage depends on the ownership category and the type of deposit.
Single accounts owned by the same person at the same bank are collectively insured up to $250,000. This includes sole proprietorships and DBA accounts. Retirement accounts, owned by one person and intended for retirement needs, are also insured up to $250,000. This includes cash accounts for IRAs and 401(k) plans, but not funds invested in stocks, bonds, mutual funds, exchange-traded funds, or annuities.
Joint accounts, owned by two or more people, are also insured up to $250,000. This is in addition to any individual insured accounts the owners may have. The balance of a joint account can exceed $250,000 and still be fully insured. For example, a couple could have a joint account with $500,000 and it would be fully covered.
Trust accounts are insured for each qualifying beneficiary up to a total of five, with a maximum insured amount of $1.25 million per owner. Accounts with one or more owners that name beneficiaries are insured as trust deposits, provided certain requirements are met. This includes informal and formal revocable trusts, as well as irrevocable trusts.
It is important to note that not all products offered by banks are covered by FDIC insurance. Checking and savings accounts, money market deposit accounts (MMDAs), and certificates of deposit (CDs) are typically insured. To determine if a specific bank is FDIC-insured, individuals can ask a bank representative, look for the FDIC sign, or use the FDIC's BankFind tool. Additionally, the FDIC provides resources such as the Electronic Deposit Insurance Estimator (EDIE) to help calculate specific deposit insurance coverage.
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Salary account holders should transfer their accounts to another bank
Yes Bank is an Indian private sector bank headquartered in Mumbai, providing services to retail customers, micro, small and medium enterprises (MSMEs), and corporate clients. The bank has a network of over 1,100 branches and 1,200+ ATMs across 300 districts in India.
In March 2020, the Reserve Bank of India (RBI) took control of Yes Bank due to its failure to raise new funding, inaccurate statements about its ability to secure funding, and underreporting of non-performing assets. The RBI imposed a 30-day moratorium on the bank's operations and reconstructed its board.
While deposits with Yes Bank are insured for up to ₹5 lakh by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI, there are valid reasons why salary account holders should consider transferring their accounts to another bank:
- Financial Stability: The financial health of Yes Bank has been a cause for concern. The bank's inability to raise capital resulted in potential loan losses, downgrades, and a withdrawal of deposits by customers. This led to the RBI intervention and the imposition of withdrawal restrictions. While the DICGC insurance provides some level of protection, it is limited to ₹5 lakh, and account holders with larger sums may want to mitigate their risk by diversifying their funds across different banks.
- Operational Stability: The RBI's intervention and the subsequent moratorium on operations may have disrupted Yes Bank's regular services. Salary account holders rely on consistent access to their funds for day-to-day transactions and should consider banks that can guarantee uninterrupted services.
- Convenience and Peace of Mind: Transferring salary accounts to another bank can provide peace of mind and convenience. Given the uncertainty surrounding Yes Bank, transferring to a more stable bank can ensure uninterrupted access to funds, especially for those with regular commitments like Equated Monthly Instalments (EMIs) or Systematic Investment Plans (SIPs) debited from their Yes Bank accounts.
- Alternative Options: There are numerous alternative banking options available in India, offering similar or better services. The State Bank of India (SBI), for example, is the country's largest commercial bank and has a more extensive network of branches and ATMs. Other banks may also offer more competitive interest rates, better digital services, or tailored financial products that suit the account holder's needs.
Salary account holders should carefully consider their options and make an informed decision based on their financial situation and goals. It is always advisable to consult with a financial advisor or expert before making significant decisions regarding your finances.
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Joint accounts are treated separately and insured up to Rs 5 lakh each
Yes Bank is an Indian private sector bank that offers its customers insurance coverage of up to Rs 5 lakh on their deposits. This coverage is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the Reserve Bank of India (RBI).
The DICGC insurance coverage limit of Rs 5 lakh is applied to each depositor's total deposits across all their accounts held with the same bank, including savings, fixed, current, and recurring deposits. This means that if a customer has multiple accounts with Yes Bank, the total coverage across all these accounts is still limited to Rs 5 lakh.
Now, let's focus on joint accounts and how they are treated under the DICGC insurance scheme. According to the RBI, both single and joint accounts are separately covered under the DICGC scheme. This means that each account holder in a joint account is treated as a separate entity, and their deposits are insured independently up to Rs 5 lakh.
For example, consider a joint account held by Mr A and his mother, where Mr A is the first account holder and his mother is the second account holder. In this case, Mr A's deposits in the joint account are insured separately from his mother's deposits, and each of their deposits is covered up to Rs 5 lakh. So, if the joint account has a total balance of Rs 10 lakh, both Mr A and his mother would be insured for their individual deposits of Rs 5 lakh each.
It is important to note that the DICGC insurance covers the principal amount and interest up to a maximum of Rs 5 lakh. If the principal amount is Rs 5 lakh, then the interest will not be covered. Additionally, there are certain exceptions to the DICGC insurance coverage, such as inter-bank deposits and deposits received outside India.
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Frequently asked questions
Yes, Yes Bank is insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the Reserve Bank of India (RBI).
The DICGC covers all deposits such as savings, fixed, current, and recurring deposits for a maximum of Rs. 5 lakh.
The insurance coverage limit is applied per depositor, covering all accounts held by them with the same bank, including different branches. Single and joint accounts are separately insured.
Yes, certain types of deposits are excluded from coverage, such as inter-bank deposits and amounts due on account of deposits received outside India.
The insurance coverage depends on the ownership of deposits. For example, in the case of joint accounts, each account holder's share is insured separately up to Rs. 5 lakh.
