If you and your spouse have a joint account in a bank and are opening a fixed deposit (FD) jointly in the same bank, you could get double the deposit insurance. All you need to do is ensure that the first holder of both the accounts is different. So if you are the first holder of the savings account, ensure your spouse is the first holder in the FD account.
What is deposit insurance?
The Deposit Insurance and Credit Guarantee Corp. provides insurance to each customer of a bank for deposits up to Rs 1 lakh. The limit is applicable across all the deposits, including savings, current, fixed and recurring. However, insurance is available only in case of a bank failure and merger with another bank.
The limit remains Rs 1 lakh even if the sum of all deposits (including accrued interest) exceeds the same.
How does it apply to joint accounts?
The total insurance available to depositors would depend upon whether joint accounts are maintained in the same capacity and same right or a different capacity and different right. Joint deposit accounts are said to be in the same capacity and same right if the names of the holders are in the same order in two or more accounts held jointly. In such cases, the balance held in all such accounts are aggregated for the purpose of determining the insured amount within the limit of Rs 1 lakh. For instance, suppose you and your wife jointly have one savings account and one fixed deposit in the same bank and in both the accounts, your wife’s name appears first, then the maximum deposit insurance available will be Rs 1 lakh only.
However, in the same case, if you are the first holder in one of the accounts, the total insurance amount would be Rs 2 lakh. This would be the case of holding an account in a different capacity and different right.
Similarly, three persons can have six accounts with various combinations as first, second and third account holder and can get deposit insurance up to Rs 6 lakh across the six accounts.
Another way to increase deposit insurance
If you do not have a joint account or want to be the first holder of all your accounts, you can maintain each account in a separate bank. Every bank will give a deposit insurance of Rs 1 lakh each.
What happens if you have a loan from the bank?
Banks have the right to set off the dues you owe them from the amount of deposits. In such cases, the deposit insurance is available only on the net amount (your deposits minus your dues) subject to a maximum of Rs 1 lakh per person per bank.