RBI Cancels Licenses of 78 Banks: Is Your Money Safe?
The Reserve Bank of India (RBI) has cancelled the licenses of approximately 78 banks, primarily urban cooperative banks, since 2014. This wave of closures has raised serious concerns among depositors regarding the safety of their savings and fixed deposits.
Under Indian banking regulations, depositors are protected by the Deposit Insurance and Credit Guarantee Corporation (DICGC). This system insures deposits up to ₹5 lakhs per bank, covering both the principal and interest. If you have deposits exceeding this limit in a single bank, the remaining amount can only be recovered after the bank’s assets are successfully liquidated, a process that often takes several years. Notably, this ₹5 lakh insurance limit applies per bank, not per branch, meaning splitting money across different branches of the same bank does not offer extra protection.
The closures, which have mostly occurred in states like Maharashtra, Uttar Pradesh, and Karnataka, are often driven by dual regulation issues, political influence in lending, and outdated technology. In Kerala, only two cooperative banks have lost their licenses so far: Adoor Co-operative Urban Bank Ltd and The Ananthasayanam Co-operative Bank Ltd. To keep your savings fully secured, financial experts advise distributing large sums across multiple different banks in portions of up to ₹5 lakhs each.
