New Delhi: Fixed Deposits (FDs) are part of your short and mid-term investments and hence it is very important that you remain at ease for the entire period of time you have chosen.
However, given the episodes of recent bank failures, several people who want to extend a part of their investment plans into FDs could be worried. The worry is whether or not it is a wise idea to keep a big amount in bank FDs.
There is another question –between bank FDs and Post office FDs, which is a better option? Or in other words between Post office FDs and Bank FD, which one gives you better peace of mind?
We have your queries answered here.
As per experts, it is a wise idea to keep your money in Post Office fixed deposit instead of bank fixed deposit. Experts believe that since post office investments fall under government’s small saving schemes, they are hundred percent backed by the central government.
The failures of banks in the recent times has taught us simple reasons as to why, perhaps, it will be a good idea to keep only Rs 5 lakh in a bank. Following the failure of a number of cooperative banks including the Mumbai-based PMC Bank being the largest last year, the budget had permitted the Deposit Insurance and Credit Guarantee Corporation (DICGC) to raise deposit insurance coverage to Rs 5 lakh from Rs 1 lakh.
The DICGC, a wholly-owned subsidiary of the Reserve Bank of India, provides insurance cover on bank deposits. Each depositor in a bank is insured upto a maximum of Rs 5 lakh for both principal and interest amount held by him in the same right and same capacity as on the date of liquidation/cancellation of bank's licence or the date on which the scheme of amalgamation/merger/reconstruction comes into force.
But are deposits in different banks separately insured? The answer Yes, if you have deposits in more than one bank, the deposit insurance coverage limit is applied separately to the deposits in each of the banks where you have the deposits. Infact your funds from each bank would be insured separately, even if (for example) you have funds on deposit at two different banks, and those two banks are closed on the same day. This is regardless of the date of closure.
What is the takeaway from the above discussion on Post office FD vs Bank FD?
From the above comparison, it is clear that if you want to invest on a sum above Rs 5 lakh, you will have better peace of mind with Post Office FDs.