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

[EnthuCC]

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?

 

[sidp]

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?

Depends on many factors.
What is the corpus?
What is that amount as a percentage of your total wealth (not networth) and total liquid wealth?
What stage of life you are at?
What this amout is earmarked for? Emergency/danger of lay off/children tuition/marriage
You are looking at fd/sb bal?
E.g. for a retired millionaire a signigicant portion of wealth as fd at too big to sink even with low return & tds is still a good option.

Universal advice: stay away from cooperative bank/gramin bank. At the min you should look at smaller fulfledged bank/ decent sfb( idfc/bandhan/equitas/au etc). Anything below is strict no no.

 

[cardio_guy]

you can easily convert your gold etf holding to physical gold because these etf's are backed by physical gold.

How can we be so sure that ETFs are backed by gold? Are these AMCs buying thousands of kg of gold daily to match the investments? Highly impossible.

 

[sidp]

. 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.

Exactly.Ashneer grover is a big feku but it is true RBI didn't even have the relevant department until recently.
That 5L insurance is just for mental peace. Practically it's worth much less.

 

[sunit123]

How can we be so sure that ETFs are backed by gold? Are these AMCs buying thousands of kg of gold daily to match the investments? Highly impossible.

Bro...Impossible is possible....Ignorance is always bliss...Check the portfolio at following link...I get monthly report on how much 1 Kg gold bars they are holding and what is the total investment.....Please read complete details...This gold is audited to match the investment...I am also attaching latest portfolio disclosure sheet..

My issue with this forum is lot of misinformation and misleading info is shared which is not moderated.

https://mf.nipponindiaim.com/FundsAndPerformance/Pages/NipponIndia-ETF-Gold-BeES.aspx

 

[sidp]

If you are worried about bankruptcy then you can be 100% "safe"with these banks.

Hdfc, icici, axis, sbi, pnb,bob.

If one of these falls, it won't matter if you had money in that bank or not. It would anyway worth nothing. Cuz that means the whole economy has failed.

 

[desiviru]

@sunit123 You don't always ought to take everything literally. Here 200 years or 50 years are just an example to establish a point that business has stayed float enough years and has seen all the ups and downs and now ready to take whatever comes it ways.

People that match your thinking are born in every generation who love to question or doubt anything and everything. I give you an example, 20 year back when I was investing in LIC policy, a person around me was skeptical of LIC future like you have doubts about banks currently and just looking at their NPAs and thinking world is falling. Trust me it won't. Banks are not a sotck market product who will go down next day. Money will always keep floating. New money being generated. These losses will be covered over time.

Stop being so pessimistic. Over the future years of your age you will develop with better approach to life then these small worries. Best of luck. If you are so much worried then stop giving money to banks and keep in Gold/Land and then worry about it being stoled or digital gold being hacked like crypto or land got grabbed by your enemy. 🤣

 

[sidp]

What's the red flag which a depositor shall observe and move funds to a safer bank before any banking crisis occurs?

for me npa comes later. You should focus more on crar( measure of owners own fund which gets sacrificed 1st) and nsfr( long term funding availability).

But the thing is if you are thinking about fd of 1.5-3yrs then it complicates the matter. In this duration a lot can happen.

 

[Garry]

A Naive Question: do Fd's also come under DICGC 5L Rule? Like If savings account has nominal balance with FDs of 5L and anything happens to bank, will the FD amount be in cover of DICGC?

 

[SSV]

A Naive Question: do Fd's also come under DICGC 5L Rule? Like If savings account has nominal balance with FDs of 5L and anything happens to bank, will the FD amount be in cover of DICGC?

Yes, FDs are covered

 

[sunit123]

Philosophy was invented to counter logic/rationality 😀 😀 I rest my case. Japnaam 🙏

 

[sidp]

A Naive Question: do Fd's also come under DICGC 5L Rule? Like If savings account has nominal balance with FDs of 5L and anything happens to bank, will the FD amount be in cover of DICGC?

Yes all deposit and interest upto 5L is insured. But in reality the real value would be much smaller.
If a bank falls, It would take years to get your money back. When you include inflation +opportunity loss+mental stress +time/money/energy wasted on recovery, you would find yourself asking was it really worth it.

Therefore your investment should be as such that you would not need this insurance. There are so many alternatives.

 

[sauravkumar]

Bro...Impossible is possible....Ignorance is always bliss...Check the portfolio at following link...I get monthly report on how much 1 Kg gold bars they are holding and what is the total investment.....Please read complete details...This gold is audited to match the investment...I am also attaching latest portfolio disclosure sheet..

My issue with this forum is lot of misinformation and misleading info is shared which is not moderated.

https://mf.nipponindiaim.com/FundsAndPerformance/Pages/NipponIndia-ETF-Gold-BeES.aspx

Exactly.... and 100% agreed on this point. 😤 😤
That's why I have stopped sharing finance and markets knowledge here. This is not the correct forum for these. Now only keeping discussion restricted to CC.

If you are worried about bankruptcy then you can be 100% "safe"with these banks.

Hdfc, icici, axis, sbi, pnb,bob.

If one of these falls, it won't matter if you had money in that bank or not. It would anyway worth nothing. Cuz that means the whole economy has failed.

Absolutely incorrect statement: If anyone says one bank failure (whether it is from any big banks like hdfc, icici etc or not) means that Whole Economy has Failed. - Totally wrong and disagree on this point.
There can be many more reasons. No one can say one banks failure means entire Economy failure.😑😑

@sunit123 You don't always ought to take everything literally. Here 200 years or 50 years are just an example to establish a point that business has stayed float enough years and has seen all the ups and downs and now ready to take whatever comes it ways.

People that match your thinking are born in every generation who love to question or doubt anything and everything. I give you an example, 20 year back when I was investing in LIC policy, a person around me was skeptical of LIC future like you have doubts about banks currently and just looking at their NPAs and thinking world is falling. Trust me it won't. Banks are not a sotck market product who will go down next day. Money will always keep floating. New money being generated. These losses will be covered over time.

Stop being so pessimistic. Over the future years of your age you will develop with better approach to life then these small worries. Best of luck. If you are so much worried then stop giving money to banks and keep in Gold/Land and then worry about it being stoled or digital gold being hacked like crypto or land got grabbed by your enemy. 🤣

"digital gold being hacked like crypto"-
Digital Gold Hacked??? Seriously ??? When it was hacked ??? Never ever heard this news.🙄🙄

While I concurrence to your other points but above statement is bluntly wrong. Please provide some trusted information backed by facts on this.

*******************************************************************************************************************************************************************

For the information: Check Point No 12.

Reserve Bank of India

There is absolutely no comparison between Gold & Money. Even currency itself is backed by Gold. So always Gold will have upper edge. It's a different debate about security, liquidity etc. BUT GOLD IS THE SAFEST BET!!😑😑🙄

Never forget about unforeseen events like World War etc. Your money is of absolutely no use in these times. Only physical assets or Gold is valuable in unforeseen situations. (Just an example to mention)


Note: If someone doesn't like my comment then please ignore.

 

[anup.mahaswari]

Gold is World's OLDEST Currency....By this logic, Stock market and all private banks are less than 50 years..Following chart from RBI will clear all the doubts...

View attachment 80731

Let us understand the numbers and what they mean. It is 2.78% Gross NPA for FY24. A large part of the Gross NPAs have been provided for as provisioning by the bank. So, the losses have been removed from bank balance sheet. Net NPA is what you could consider as ongoing issue which will be much lower (closer to 1%).

That NPA is by design. If banks do not take risk, the economy cannot work (let alone grow). Who will fund the small and big businesses, the consumption and our credit cards.

 

[desiviru]

Exactly.... and 100% agreed on this point. 😤 😤
That's why I have stopped sharing finance and markets knowledge here. This is not the correct forum for these. Now only keeping discussion restricted to CC.



Absolutely incorrect statement: If anyone says one bank failure (whether it is from any big banks like hdfc, icici etc or not) means that Whole Economy has Failed. - Totally wrong and disagree on this point.
There can be many more reasons. No one can say one banks failure means entire Economy failure.😑😑


"digital gold being hacked like crypto"-
Digital Gold Hacked??? Seriously ??? When it was hacked ??? Never ever heard this news.🙄🙄

While I concurrence to your other points but above statement is bluntly wrong. Please provide some trusted information backed by facts on this.

*******************************************************************************************************************************************************************

For the information: Check Point No 12.

Reserve Bank of India

There is absolutely no comparison between Gold & Money. Even currency itself is backed by Gold. So always Gold will have upper edge. It's a different debate about security, liquidity etc. BUT GOLD IS THE SAFEST BET!!😑😑🙄

Never forget about unforeseen events like World War etc. Your money is of absolutely no use in these times. Only physical assets or Gold is valuable in unforeseen situations. (Just an example to mention)


Note: If someone doesn't like my comment then please ignore.

That happens when you read between lines. I haven't said it is hacked. I just said, get it and then worry about it being hacked which is not possible like crypto because he is worrying too much about banks going bust and world falling. So stop worrying for no reason about banks too.

You just join with him and live a pessimistic life. Let other grow with rest of world.

 

[desiviru]

Philosophy was invented to counter logic/rationality 😀 😀 I rest my case. Japnaam 🙏

What you meant to say here is, "I don't have enough facts to prove my point. So I am out."

Took a pdf of RBI website and tryied to spread negativity. When failed, he rested his case. 🤣

 

[Credit_Cards]

There will be slight pressure on banking system but the real pressure will be on NBFCs who have milked the low ticket size customer to the core expectation is this will push RBI towards reforms as was in last speech of governor.

Not expecting Any Bank to collapse because Share price is down by 20-30 or 50%

Yes Bank fell 80%+ before the liquidity crisis took place

 

[sauravkumar]

That happens when you read between lines. I haven't said it is hacked. I just said, get it and then worry about it being hacked which is not possible like crypto because he is worrying too much about banks going bust and world falling. So stop worrying for no reason about banks too.

You just join with him and live a pessimistic life. Let other grow with rest of world.

Do you think others are fool?? Or they can't understand what you have written??

I don't thing there is any wrong in asking for proofs which you weren't able to provide.😑😑

It seems you don't have any facts to prove your points. THEN STOP SAYING THOSE THINGS WHICH YOU CANNOT PROOF. (As those are WRONG, ABSOLUTELY INCORRECT).

"You just join with him and live a pessimistic life. Let other grow with rest of world."- Never ever do personal comment. I am behaving maturely here by ignoring this and not doing any person specific comment. 😤 😤

Only LOSERS behaves like this who can't stand on their words/ prove their points.👎👎


Suggestion to Seniors of this forum:
One basic point which should be taken care in this forum - "There are many experts in this forum without actually having any knowledge".

 

[dvader]

Damn! this thread is internet in a nutshell 🤣. India has an excellent (more or less) regulator and banking system is solid. Just don't put your money in co-operative banks or anything run by anyone involved in politics.

The 5L insurance is not nothing. It won't be super quick or simple but you will get your money. After PMC failed, customers with less than 5L deposits were eligible to withdraw their amount immediately after DICGC claim settlement. People with 5L+ balance are fucked but even they should be able to get all of their money by 2032 with interest (though it's just pennies)

Yesbank is another example, in my opinion they shouldn't have been allowed to exist as a separate entity after what happened. But even they were saved.

Unlock Financial Freedom with PMC Scheme - Unity Bank

theunitybank.com

Even SFBs are safe bet for less than 5L balance not that they are going anywhere.

Never ever ever ever put your money in local cooperative banks, never. You can get a loan with them yes but don't put a single penny in them.

And @EnthuCC cooperative banks are a grey area cuz many are setup via the state co-op act (basically an act passed to scam the general public). But no depositor (I mean FD and Saving Account) lost money with YesBank, yes there was a small moratorium until RBI figured out the specifics but not a single depositor lost his money. Bonds and Shares are a separate issue. Trust your regulator.

Edit: One bank failure leading to an economic shutdown depends on which bank it is and why it fell. 2008 was not long ago there are good documentaries and court documents now to study the whole thing to get more insight on the subject matter. If one of the SIBs(systemic important banks) fails....well everything would be FUBAR well before you read that in the newspaper. If one of the top 15-20 banks fails, they will be saved or merged depending on how they are linked to banks above it (In RBIs court filing, it claimed YesBank to be critical to the Indian banking system). If an SFB or lower level scheduled bank fails... straight-up merger, 5L cleared within 60-90 days by DICGC and the rest is up to the acquiring bank. Remember the 5L insurance is solid as long as the SIBs are healthy and thriving. It's your insurance against small bank failures, just like other insurance products it's of no use if everything fails.

 

[EnthuCC]

Thank you all for your detailed insights. They're pretty valuable to me. I noticed some sparks in disagreements in the comments but everything was civil.

My question was not only about IDFC, it was related to all the banks in India. I provided IDFC bank as an example as I had seen the post in an another thread. I wouldn't trust co-operative banks with my money as I've read many bad stories about it over the years.

I don't come from a financial background hence I asked this question to learn the signs or symptoms of any financial institution collapse before it happens. I'm sure there are many people out there with strong understanding of finance and economy who can predict the collapse of any financial entity by looking at their balance sheet or other factors. Is it wrong to assume that CAs and bankers can predict it more easily than the others? And would they cause alarm the stakeholders?

I simply want to understand how a common man can observe these signs and prevent loss.

Having said that in India, SBI, HDFC and ICICI are considered to be too big to fail

I understand that these banks are too big and the govt. would try their all might to save these banks to save economy. So I understand these are the least riskiest banks for the depositors.

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.

It is achievable for depositors with small amount. But where do these crorepatis put their money? How do they do it?

Mark my words and save my message that these products are more safe than money in bank

I understand that ETFs are relatively secure. Gold might be the safest bet but are gold backed ETF that safe? safer than bank?
ETFs are regulated by SEBI and not RBI. So these ETFs are not insured. And these ETFs are backed by AMC. And these AMCs can go out of the business too.
So in my opinion they carry risk too.

I'm still not well informed so if you have more information about then I'm definitely interested to learn.

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.

That is relieving to know. Can your recommend any website where I can track this news frequently please? Most business news websites provide brief of the financial report.

for me npa comes later. You should focus more on crar( measure of owners own fund which gets sacrificed 1st) and nsfr( long term funding availability).

But the thing is if you are thinking about fd of 1.5-3yrs then it complicates the matter. In this duration a lot can happen.

This is something new I learned today. I will do more research about it. Thanks.

No one can say one banks failure means entire Economy failure.😑😑

The big banks carry whole economy. No country would like the bank run. I remember reading about Silicon Valley Bank crisis. Many startups couldn't pay salary of their employees.

"digital gold being hacked like crypto"-
Digital Gold Hacked??? Seriously ??? When it was hacked ??? Never ever heard this news.

I just searched on Google if anything happened like that. The first result was this.

"Paxos Rescued $20 Million In Digital Gold From FTX Hack"

https://www.binance.com/en-IN/square/post/133039

 

[cardy]

It is achievable for depositors with small amount. But where do these crorepatis put their money? How do they do it?

There may be some people who keep their huge amount of money in banks but as per my limited understanding most if not all of them never keep crores of money in just banks. Even if they put it on banks it's for very temporary times.

Because if someone has crores of money they always decide to let the money work for them by investing in various forms.

And liquid money as the wise say is needed as 6 to 12 months expenses. And only that amount of money is required to be put in banks.

Besides mostly they also carry debt in banks way more than they keep in banks so for the part of worry they don't worry much, the banks worry more for lending them huge amounts. 😆

I may be wrong but I don't think Bezos, Musk or zuckerberg have thousands of crores lying in their bank accounts! Never was in the Ratan Sirs account.

So you see it's very much manageable.


PS: I am not of that very few lucky ones, so my perception may not be 100% correct but you can get the idea.💡