Is IDFC First Bank Safe for Fixed Deposits?

After extensive research and careful consideration, I decided to set up a Fixed Deposit (FD) for my mother with IDFC First Bank. There are several compelling reasons behind my choice. Firstly, IDFC First Bank offers highly attractive interest rates compared to other banks and Non-Banking Financial Companies (NBFCs). Secondly, their flexible deposit period options were a perfect fit for my mother's needs. Lastly, the quarterly payout option was a significant advantage that appealed to my mother, as it helps her manage her finances more effectively. IDFC First Bank also provides additional interest benefits to senior citizens, which earned it extra points.

IDFC Bank, like any other private bank, offers up to a certain limit of cover under DICGC ( Deposit Insurance and Credit Guarantee Corporation) insurance. Any bank in India offers this insurance up to a limit of Rs 5 lacs only. Nationalized banks, such as State Bank of India, come with the added advantage of zero risk as per the DICGC scheme.

Specific Coverage Under DICGC

Assuming the question pertains to IDFC Bank, deposits up to one lakh are covered under the DICGC Insurance. The choice of the bank ultimately lies with the depositor, as the safety of deposits is a global issue that becomes crucial during financial crises.

It is important to note that ISFC (Infra Credit and Financial Services Ltd.) is not a bank. It is merely a bank code used to identify the bank. There is no issue with banks when it comes to Fixed Deposits (FDs) and Recurring Deposits (RDs).

To minimize risk, it is advisable to have FDs with two or three different banks. Avoid putting all your eggs in one basket, especially when it comes to investing. For example, if you have fifty lakh in cash and want to invest it in FDs, it is wise to open a one-lakh FD in ten different banks. This strategy minimizes risk as each deposit is insured up to a maximum of 5 lacs per customer per bank.

While the overall rate of return may vary slightly between different banks, the core principle remains the same: diversification is key to risk management in banking and finance. By spreading your risk across multiple banks, you ensure that even if one bank encounters issues, the majority of your funds remain safe.