Zero-balance accounts are popular choices for both salaried and self-employed professionals today, especially those starting their financial journeys. The zero-balance account opening online process is quick and convenient with minimal documentation needs, while you are free from minimum balance restrictions (and subsequent charges for not maintaining the same). At the same time, these accounts also come with several free services and other benefits for customers.
Nowadays, there are several concerns we all have regarding to the safety of our money and accounts, particularly due to the growing instances of digital fraud and hacking by cybercriminals. There are also worries regarding bank failures among a large section of the Indian population (although this is a rare scenario). If you are wondering whether your zero-balance account is suitably protected by the bank or not, here are a few insights that may help.
How the DICGC Protects Bank Accounts
The deposit insurance and credit guarantee corporation (DICGC) is the protection mechanism in the banking sector of the country. Here’s learning more about it below.
Insured Banks under DICGC
- Commercial banks (inclusive of foreign bank branches, regional rural banks, and local area banks)
- Cooperative banks (state, primary, central, etc.)
However, primary cooperative societies do not have DICGC insurance.
What is insured?
All deposits are insured by the DICGC, including fixed, savings, recurring, current, and more. Deposits that are not insured include:
- Those of state/central governments
- Those made by foreign governments
- Inter-bank deposits
- Deposits of state land development banks with state cooperative banks
- Any sum due on account of and any deposit received outside India
- Any specifically exempted amount by the corporation with prior approval from RBI
Maximum insured deposit amount
Every depositor gets insurance till a maximum of Rs. 5 lakh for both interest and principal held in the same capacity and right as on the date of cancellation/liquidation of the bank license or the date on which any merger/reconstruction/amalgamation comes into force.
Key things worth knowing
The DICGC, while registering banks, gives them printed leaflets for display at branches, talking about the protection that it provides to depositors. You can ask your branch officials about the same if you have doubts about whether your bank is insured by the corporation or not. Also, note that the maximum coverage includes deposits that you keep in different bank branches. All funds under the same ownership at the same financial institution are added before the deposit insurance is calculated.
Separate insurance is possible if the funds are kept in different ownership types or are deposited in separate banks/financial institutions. Deposits in separate banks are insured separately, with individually applicable coverage limits. The deposit insurance premium is entirely paid by your bank.
Claims & Payments
In case a bank goes into liquidation, the DICGC is liable to pay the claim amount of every depositor up to Rs. 5 lakh to the liquidator. This should be done within two months from the date of receiving the list of claims from the liquidator.
The entity has to then disburse the claim amount to every deposit. In case of a bank being amalgamated/merged with another bank or reconstructed, the DICGC will pay the concerned institution the difference between the insurance cover limit or the full amount of the deposit whichever is lower, and the amount received as per the scheme within two months from the date of the claim list receipt from the transferee bank/CEO of the insured bank.
Now that you have an idea of the basic protection mechanism in place at banks, here is a list of some dos and don’ts to follow to keep your account safe.
What You Should Do to Keep Your Zero-Balance Account Safe
Here are some ways in which you can keep your zero-balance account protected:
- Keep your passbook, chequebook, and ATM card securely.
- Change passwords of net/mobile banking applications and card pins periodically.
- Always register your latest email address and mobile number with the bank. It will help you stay updated regarding account transactions.
- Use online transaction platforms carefully, sticking to just reputed ones, and update your passbook periodically to stay updated on transactions.
Never share your credit/debit card details with others. This includes personal information like the debit card number, CVV, PIN, and expiry date. Do not share your UPI PIN and other banking passwords with anyone, even if they pretend to be bank officials or other authorities. Banks never ask for these details from any customer. Avoid clicking on unknown links that you receive through emails or SMS.
Do not install applications via which your laptop/mobile phone may be controlled remotely, or offer any personal details to fraudsters. Some may try to target you with online KYC updates and offers like free loans on your account. Also, avoid saving passwords on your phone or using unsecured sites (starting with http://) for transactions.
Conclusion
Zero-balance savings accounts are thus suitably protected by the DICGC in case of any bank-related administrative change or other issues. At the same time, safeguarding your account from hacking and cyber threats has a lot to do with your alertness. You should be careful about following some best practices to keep your account secure at all times.
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