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There is probably no doubt that in the last few years, online transactions have replaced cash. Payment is done easily through UPI and there is no hassle of carrying cash. For this, it is only necessary that you have money in your bank account, after which you can do online transactions. But have you ever wondered what will happen to your money if your bank goes bankrupt or is on the verge of closure for any other reason? Did you receive the money credited to your account? So let's try to find answers to all these questions. You can know further about this…
What is the reason behind bank bankruptcy or closure?
When a bank's liabilities exceed or exceed its assets, the situation is called bankruptcy. If we understand it in simple words then the expenses of the bank start becoming much more than its earnings. Due to this the bank has to suffer losses and then if it is not able to recover from this then the bank becomes bankrupt, hence the regulators decide to close that bank.
How much money do customers get back after a bank collapses?
If a bank is closed, then under this rule of the Reserve Bank, Deposit Insurance and Credit Guarantee Corporation i.e. DICGC provides insurance cover to the customers on the amount deposited in their bank account.
Under this cover, Rs 5 lakh is given to the customers in case the bank collapses. Even if you have Rs 10 lakh or more deposited in your bank. Account holders of a failing bank are insured only for an amount up to Rs 5 lakh.
RBI took these important steps!
Whenever a bank collapses in the country, keeping the customers in mind, RBI and the government together merge the failing bank with a bigger bank. This saves customers from losing money. This has been seen on many occasions in India.