Deposits with Yes Bank insured up to Rs 5 lakh but what should salary account holders do?

Although the government has limited withdrawals from Yes bank accounts to a maximum of Rs 50,000 per month, account holders should know that deposits with Yes Bank are insured for up to Rs 5 lakh by the DICGC. Budget 2020 proposed to increase insurance coverage of deposits with scheduled banks from Rs 1 lakh to Rs 5 lakh by Deposit Insurance and Credit Guarantee Corporation (DICGC). DICGC, a wholly-owned subsidiary of the Reserve Bank of India (RBI), increased the deposit insurance limit to Rs 5 lakh with effect from February 4, 2020.

This may be the reason why RBI is allowing depositors to withdraw up to Rs 5 lakh or the total account balance whichever is lower in case of special circumstances or emergencies even while withdrawals for regular requirements are limited to Rs 50,000 till April 3, 2020.

What kind of deposits are covered

DICGC covers all deposits such as savings, fixed, current, recurring and so on except for the following deposits:
Deposits of foreign governments;
Deposits of Central/State Governments;
Inter-bank deposits;
Deposits of the State Land Development Banks with the State co-operative bank;
Any amount due on account of and deposit received outside India
Any amount, which has been specifically exempted by the corporation with the previous approval of Reserve Bank of India

What if you have accounts at different branches of the same bank?
The insurance cover offered by the DICGC covers all the accounts of one depositor held with the same or different branches of the same bank for a maximum of Rs 5 lakh. Therefore, if you have more than one account with the same bank (even if in different branches), then, too, you will be insured for Rs 5 lakh only.

However, the deposit insurance coverage limit is applied separately to deposits in different banks. For instance, let us say you have accounts with Bank A and Bank B. Then each account will be separately insured up to Rs 5 lakh.

What about joint accounts?
As per the RBI, both single and joint accounts will be separately covered under the DICGC scheme.
Sample this: You have a savings account which is operated solely by you and another one jointly operated with your spouse but both are with the same bank. In case the bank fails, then in such a case, both the accounts will be separately insured under the deposit insurance scheme.

What if you have a salary account in YES Bank?
As you generally get your salary credited at the end of the month or the first day of the next month, you shouldn't panic. Instead, in a situation like this, you should talk to your human resource (HR) department on salary-related issue and immediately transfer your salary account to another bank so that future salaries are not blocked.

Similar steps will have to be taken for those whose EMIs and/or SIPs are debited from Yes Bank accounts.