Why splitting fixed deposits across multiple banks doesn't add up

So, the next time someone tempts you with a slightly higher FD rate from a lesser-known bank, point them not to DICGC's fine print but to hybrid funds

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