InvestorQ : Please explain the deposit insurance to the 5lakhs concept in the Budget2020?
Suhani Mirza made post

Please explain the deposit insurance to the 5lakhs concept in the Budget2020?

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Tanu Shukla answered.
1 year ago
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Currently, as per the provisions of RBI, deposits with all commercial banks and cooperative banks are insured under the Deposit Insurance and Credit Guarantee Cooperation (DICGC). However, Primary Cooperative societies are not covered under DICGC. 

As per the current rules of DICGC, every depositor in the bank is insured up to Rs 1 Lakh for the principal and interest amount on deposits. These deposits shall include all the deposits held by a person be it in a savings account, current account, fixed deposits and so on. This means that even if the total of all deposits held by an individual in a single bank exceeds Rs 1 lakh, then he/she shall be compensated for only Rs 1 lakh.

As per the latest announcement in budget, this limit of Rs 1 lakh has been increased to Rs 5 lakh.

This increase was long overdue and will increase the sense of security among the investors.
If an individual has various accounts at different branches of the same bank, all the accounts shall be included to calculate the cover of Rs 5 lakh. However, accounts with different banks shall be considered separately and the limit of 5 lakh shall be applicable per bank.

A and B invest in a business in the ratio of 3: 2, if 5% of the total profit goes to charity and A's share, is 855 rupees the total profit is
Let the total profit be ‘X’
Profit after deducting charity shall be ‘X-.5X’
This means distributable profit shall be .95X
A’s share of Profit would be 3/5 of .95 X and B’s share of Profit shall be 2/5 of .95x
Solving the equations, we will get the value of X=1500 (Total Profit)
Distributable Profit = 1500*95% = 1425
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