Why splitting FDs across banks doesn't add up

Two teachers, Ram and Shyam, were chatting after school.

- HARSH ROONGTA

Ram said: "If I had as much money as Birlaji, I'd be richer than him." Shyam was puzzled. "How can that be? If you have the same money, how would you be richer?"

Ram's answer: "Simple. I'd be doing tuitions on the side!"

I was reminded of this gem when someone recently asked if it was smart to split fixed deposits (FDs) across multiple banks in blocks of about ₹5 lakh—the upper limit covered by the Deposit Insurance and Credit Guarantee Corporation (DICGC) in case a bank fails.

It's a popular tactic among savers looking to squeeze out a bit more yield. They spread money across smaller or lesser-known banks that offer slightly higher interest rates and rely on DICGC insurance to feel safe. But here's the part that doesn't get said enough: Just because your money is insured it doesn't mean you'll get it quickly—or with any interest for the waiting period.