You have been long parking your hard earned money in your neighbourhood bank. With high interest rates on deposits compared to other banks you are all praises for your bank. And with ATM, net phone, net banking facilities thrown in what more can you ask for?
But then, if your bank offers unimaginably high interest rate on deposits compared to other banks it should immediately ring alarm bells in your ears. There are several fly-by-night operators around. Can you afford to risk your hard earned money?

While this is not to scare you from depositing your money in co-operative banks here are few things you should know.

Heard of deposit insurance? Wondering what is it? All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are insured by the Deposit Insurance Credit Guarantee Corporation (DICGC). The corporation insures your savings, fixed, current, recurring deposits to a maximum of Rs 1,00,000. In other words if a bank goes into liquidation the DICGC is liable to pay to each depositor through the liquidator, the amount of his deposit upto rupees one lakh within two months from the date of receipt of claim list from the liquidator.

Find out if your bank deposits are insured. You could check out the DICGC website www.dicgc.org.in to find your bank listed there. Also know that the maximum amount of deposit guaranteed is per depositor and not per account. Which means whatever your total amount of deposit be the amount you’ll get is Rs 100,000 only. And yes, after this is settled, your other accounts with other banks will lose the guarantee.

 
Given a choice you’d prefer putting your money in a fixed deposit considering the attractive interest rate it offers to a savings account. But you need flexibility. In times of need, breaking a fixed deposit would mean losing the interest. How about a flexi account that offers you the benefit of a savings account and a fixed deposit? How about a Flexi Deposit?

The State Bank of India, Union Bank of India, Corporation Bank and several other have flexi deposits in the form of ‘Savings Plus’, ‘Flexi Plan and ‘Corpclassic’ respectively. A minimum balance of Rs 5000 for savings and fixed deposit account is all you need and you can operate a flexi deposit account. Whenever the amount in the savings account falls below a certain limit, money from the fixed deposit can be transferred to it. Also you need to give instructions to the bank stating that surplus amounts (in multiples of 1000) in the savings account beyond a given minimum be transferred to the fixed deposit every month.

This way you only need to figure out the minimum amount that needs to be maintained in the savings account. Note that if the balance falls below the pre-determined limit set the bank may deduct Rs 25 or so from your account.

Wondering whether ATM facility is available for such accounts? The answer is yes. You would be given a separate pass book and a roll over of deposit on maturity is permitted too. In other words you gain maximum liquidity and high interest rate too.

 
A man walks into an insurance office and asks for a job.
"We don't need any one," they replied.

"You can't afford not to hire me. I can sell anyone anytime any thing."

"We have two prospects that no one has been able to sell. If you can sell just one, you have a job."

He was gone for about two hours and returned and handed them two checks, one for a $80,000 policy and another for a $50,000 policy.

"How in the world did you do that," they asked.

"I told you I'm the world's best salesman, I can sell anyone anywhere anytime."

"Did you get a urine sample?" they asked him.
"What's that?" he asked.

"Well, if you sell a policy over $40,000 the company requires a urine sample. Take these two bottles and go back and get urine samples."

He was gone for about eight hours and then he walks in with two five gallon buckets, one in each hand. He sets the buckets down and reaches in his shirt pocket and produces two bottles of urine and sets them on the desk and says, "Here's Mr. Brown's and this one is Mr. Smith's."

"That's good," they said, "but what's in those two buckets?"
"Well, I passed by the school house and they were having a state teachers convention and I sold them a group policy!"
 

There were various reasons given by the government to nationalise the insurance sector: take insurance to the masses, facilitate the flow of long term funds (which insurance companies, by virtue of the business they are in, have ready access to) into development of infrastructure in the country, and safeguard the interests of policyholders. Towards this end, state insurers did develop the insurance sector, though most experts believe these monopolies could have done much, much more.
In the early nineties, the government went on a reforms binge and started loosening controls on Indian industry. In 1993, the government appointed the R.N. Malhotra Committee, to draw up a blueprint for insurance sector reforms. The panel submitted its report a year later, recommending privatisation, backed by stiff entry guidelines and stringent regulation, so as to avoid a repeat of the pre-nationalisation free-for-all.
The Insurance Regulatory and Development Authority (IRDA) was formed to regulate the sector and oversee the process of privatisation. In 2000, the IRDA started giving out licenses and a year later the first of the private players started operations. The wheel had come a full circle.
Under state controls, the insurance sector, both life and non-life, grew steadily. Still Indians are not adequately insured and lag behind most countries. Given this scenario it’s no wonder why a lot of private insurers have joined in. In many ways the re-entry of private insurers has made a big difference in the industry. The customer has once again become the prime focus of all companies and is now getting better service, quicker settlement, tighter regulations and greater awareness. And this situation can only improve.

(Reference : The Layman’s Guide to Insurance)
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