Monday, May 23, 2022

Is it possible that having more money in the bank can bring problems? Understand the rules

Many people are still unsure if they should deposit money in the bank or keep the money in their account. Many individuals believe that having more money in the bank is a bad thing. People generally have reservations about retaining deposits of greater than 5 lakh rupees. Please let us know what the bank’s deposit rules are.

Why the confusion about 5 lakhs?

Many people believe that deposits of more than five lakh rupees should be avoided, but this is not the case. According to the rules, if the bank goes bankrupt or insolvent, up to five lakh rupees in security is guaranteed. That is, if the bank fails or goes bankrupt, the government will compensate you with five lakh rupees. People may believe that no more than 5 lakh rupees should be stored in the bank for this reason.

DICGC is responsible for payment

The government prevents the troubled bank from drowning by merging it with a larger bank. If a bank fails, the DICGC is responsible for paying all account holders. In exchange for guaranteeing this sum, the DICGC charges the banks a premium.

How much money can I deposit?

You can maintain as much money in your bank account as you wish. However, you should have strong confirmation of the source of income, as you will be required to explain where the money originated from if questioned by the IRS. There will be no issues if you pay your taxes according to the regulations and have proper documentation of income.

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It can be difficult in this case

Problems can develop if you have more money in your bank account and are unable to prove the source of that money in front of Income Tax. Your bank account may be frozen, and you may face criminal charges.

Profit and loss should be taken care of

Furthermore, before putting more money into a savings account, one should consider the profit and loss, as the interest on the deposit is lower. As a result, many people assume that instead of putting more money in their savings account, they should create a fixed deposit or invest it in a mutual fund, where they will earn greater interest.

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