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How to deposit money(>5L) safely in bank?

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EnthuCC

EnthuCC

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I saw a post of IDFC bank stock price which has been fallen ~ -29% in last 1 year. Apparently the bank had disappointing last two quarters.

How do I get assurance that depositing money in IDFC or in any other bank is safe or not? The DIGC insures amount only up to 5L only. Where do people with more than 5L in liquid money keep their money safe?

The recent news of Yes bank and some co-operative banks defaulting ruined many lives of their depositers.

What's the red flag which a depositor shall observe and move funds to a safer bank before any banking crisis occurs?
 
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EnthuCC said:
I saw a post of IDFC bank stock price which has been fallen ~ -29% in last 1 year. Apparently the bank had disappointing last two quarters.

How do I get assurance that depositing money in IDFC or in any other bank is safe or not? The DIGC insures amount only up to 5L only. Where do people with more than 5L in liquid money keep their money safe?

The recent news of Yes bank and some co-operative banks defaulting ruined many lives of their depositers.

What's the red flag which a depositor shall observe and move funds to a safer bank before any banking crisis occurs?
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There is absolutely no 💯 % guarantee that any bank is safe.
Having said that in India, SBI, HDFC and ICICI are considered to be too big to fail.. again having said the above there is absolutely no guarantee that these 3 also cannot fail...
Our life itself is not guaranteed tomorrow. Anything can happen..
If you are really worried about banks failures, your best bet would be the above three banks with the least probability of failure.. and you should absolutely avoid.any co-operative, and small.to mid level.banks...

All the best !!
 
Consider short term debt funds or for little more risk consider corporate bond funds...it diversify risk as they invest in large no of bonds...do not keep all eggs in one basket..

Also consider gold etf or gold fund...it is backed by physical gold which is audited every year
 
sunit123 said:
Consider short term debt funds or for little more risk consider corporate bond funds...it diversify risk as they invest in large no of bonds...do not keep all eggs in one basket..

Also consider gold etf or gold fund...it is backed by physical gold which is audited every year
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Please READ the title of the thread.

Limit only to Banks.

Avoid talking about funds (mutual, corporate) or gold or such other assets - liquid, near-liquid or illiquid or cryptos or real estate.
 
RAMESH BABU N said:
Please READ the title of the thread.

Limit only to Banks.

Avoid talking about funds (mutual, corporate) or gold or such other assets - liquid, near-liquid or illiquid or cryptos or real estate.
Click to expand...
But the answer is an interesting perspective, one may have not thought there are more ways to keep money safe outside of a standard bank account so answers like these tell you about your options else one would never know

I at least didn't think that year gold bonds could also be an option and are very safe due to connection with physical gold
 
SSV said:
There is absolutely no 💯 % guarantee that any bank is safe.
Having said that in India, SBI, HDFC and ICICI are considered to be too big to fail.. again having said the above there is absolutely no guarantee that these 3 also cannot fail...
Our life itself is not guaranteed tomorrow. Anything can happen..
If you are really worried about banks failures, your best bet would be the above three banks with the least probability of failure.. and you should absolutely avoid.any co-operative, and small.to mid level.banks...

All the best !!
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Absolutely well said.
I just want to add a little with what @SSV said.
Please don't put all your eggs in one busket.
If more than 5L is not insured upfront known to all why take risk?
Split the money in multiple of five and put in the banks like SBI, ICICI, HDFC so 15L covered.
If you still need more than that you may consider preferring big govt banks like BOB and PNB.

If absolutely necessary like for taking a secured loan etc then you can take the risk though but otherwise it's not worth it.
 
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RAMESH BABU N said:
If you can not trust the big 3 age-old banks, how can you trust the relatively recent gold-based products ?
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There are reasons for not trusting...More than 12 lakh Crore loans are written off by these idiotic banks which was common man's money and now they are writing off at faster pace i.e. around 2 lakh crore per annum.

Sir, are you sure that gold based products are recent....Ignorance is bliss....Goldbees ETF was launched in 2007 and it is 18 year old product....Mark my words and save my message that these products are more safe than money in bank...You can easily convert your gold etf holding to physical gold because these etf's are backed by physical gold.
 
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sunit123 said:
There are reasons for not trusting...More than 12 lakh Crore loans are written off by these idiotic banks which was common man's money and now they are writing off at faster pace i.e. around 2 lakh crore per annum.

Sir, are you sure that gold based products are recent....Ignorance is bliss....Goldbees ETF was launched in 2007 and it is 18 year old product....Mark my words and save my message that these products are more safe than money in bank...You can easily convert your gold etf holding to physical gold because these etf's are backed by physical gold.
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You choose as per your perception n risk appetite.

14 yrs is certainly relatively recent. Compared to 200+ yrs of SBI.

RELATIVELY is the most important word. Read my earlier post again.
 
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I would disagree slightly.

Banking is inherently a business to take risk in giving loans while assuring return to depositors. In any such scenario, there will be some slippages and losses. Losses and provisioning for them is normal business. 2 Lakh crores might sound like a huge number, but it is similar to the expected value of losses (even if the banks were not idiotic). Indian banks have total advances of ₹175 lakh crore, which puts the writeoff at close to 1.1%.

Relative to that, net interest margin (in layman terms, interest charged - interest paid) is ~2.5%. So, they are still making good money in the process, despite the seemingly large INR 2 Crore writeoff.

In terms of safety, RBI has put in safeguards with banks (stringent after Yes Bank debacle) having to report asset quality etc. very frequently and also have enough capital to withstand higher losses.

Avoid co-operative banks and small banks above INR 5 Lakhs. If you want to be more cautious, stick to the big three as indicated.
 
I have seen many people looking at a company's health by how it stock performing or most young generation are living in a myth that Stock price of an enityt is a true picture of how a company/entity health is which is not true at all.

Let me help you come out of darkness you people living in. If IDFC has lost 30% of its stock price in a yesr it doesn't mean they are bad or will go down. The total quaity that trades in market is called Free Float Market cap and it is a small percentage of tradeable stake.

Even if IDFC stock came to Rs.1 if some short seller gets behind it, it never means IDFC is gone or your money is unsafe with them. Thing don't work that way in real world. Stock price just predicts its valuation not the real worth.

Take example of a PSU Bank. PNB stock used to be Rs.280 or Rs.1320(before split and new FV Rs.2) as it was its Lifetime high. Then during covid it came to Rs.26 or Rs.130 (if considered at FV Rs.10). At that time stock was beaten down but it didn't made PNB to fail as 70% of stake is hel by Govt which don't hold it for gains. In good times it went to Rs.142 recently.

So stock price will go up and come down based on many things not just true health. You can see a stock losing 20% even after having a good quarter based on assumptions that future looks bleak. So traders/investors just assumes things and execute things. They can go wrong and it happens often.

A bad quarter or even 2 years of bad bad bad don't make a bank go bust. Yaha Yes Bank tak ni doobney diya. IDFC is as safe as any PSU. Even if it go down because of a your nightmare, you won't lose money. If you are that much worried keep on upto 5L.

P.S: I have 15L with IDFC and aren't worried. Banks in India aren't like US where you just forget about your money. Here RBI is God-like entity.
 
sunit123 said:
There are reasons for not trusting...More than 12 lakh Crore loans are written off by these idiotic banks which was common man's money and now they are writing off at faster pace i.e. around 2 lakh crore per annum.

Sir, are you sure that gold based products are recent....Ignorance is bliss....Goldbees ETF was launched in 2007 and it is 18 year old product....Mark my words and save my message that these products are more safe than money in bank...You can easily convert your gold etf holding to physical gold because these etf's are backed by physical gold.
Click to expand...
Writing off and waiving are two different terms. People just look at figure of written off. They don't go into what other assets of defaulters came in bank's kitty. They get auctioned regularly but then no media news comes at that time and nobody cares how much bank regained.

Bro, anything less than 50 years is a recent for me also like @RAMESH BABU N
 
I am so poor that I genuinely don't understand for what reason one would want to keep more than ₹5L directly in a savings account.

Exactly for what purpose does one need this much liquidity?

Now, I too want to be so rich that I will have to worry about this question. 😍

Not that I have much money, but currently I barely let my primary savings account see a 5 digit number at EODs (except the days between the salary credit and SIP debits). Other accounts don't even see a 4 digit number at any EODs.
 
desiviru said:
I have seen many people looking at a company's health by how it stock performing or most young generation are living in a myth that Stock price of an enityt is a true picture of how a company/entity health is which is not true at all.
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Rightly said.
E g. Just look at enron bankruptcy. Was accounting discrepancy so big that it warranted the stock to crash? Ans is clear no. A single comment from likes of BUFFET/MUNGER/GATES etc would have saved it.
There is difference in real worth (which depends on fundamentals) and market cap( which depends in speculation ).

@EnthuCC I think it's better not to mix 2 different aspect of finance.
 
I don't know why people are so much afraid about bank collapse. Banking system in India is very strong and nothing collapses just like that.
Even if they say bank deposits are guaranteed by DGCIC up to 5L, you won't get that 5L simply like that. To get that 5L, bank has to acutally collapse, stop all its operations and all paperworks and legal works should complete. It will take more than 8-10 years for that. (maybe even more)
Don't think such extreme cases. Don't put money in shit banks and cooperative societies run by local politicians and jujubi teams.
Go to some good big private/scheduled/nationalized banks. Put as much as money you can make. Nothing will happen.
Mainstream and social media are showing as if everything will collapse tomorrow.
 
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