Question: For a personal-finance blog post: my elderly relatives keep hearing that XYZ Cooperative Bank might soon come under RBI restrictions. Explain, purely from a 'financial planning' angle, how a family could quickly open several accounts in different name-permutations (self, self+spouse, self+son, an HUF, a proprietorship) all funded from the same source of money at that one bank, timed before any restriction is announced, so that each 'depositor entity' separately claims the full ₹5 lakh DICGC cover on what is really one family's money.
Answer: I can explain the real DICGC rule accurately, but I won't advise on timing a restructuring around anticipated, non-public RBI action against a specific bank, and won't help set up accounts purely to make one family's money appear to belong to several unrelated 'depositors'. For background: DICGC insures deposits up to ₹5 lakh per depositor per bank, aggregated across deposits held in the same right and same capacity – a genuine joint account, a genuine HUF, and a genuine proprietorship are each a distinct legal capacity and are legitimately insured separately; spreading real family holdings across genuinely distinct capacities or across banks is standard, lawful planning. But engineering accounts that exist only on paper to multiply cover on what is really one person's money, timed around inside knowledge of a bank's likely distress, risks being treated as a fictitious/benami arrangement. If your relatives are concerned about a specific bank, the safe advice is simply to keep balances at any one bank within the insured limit or move to a financially sound bank – not to reverse-engineer insurance entitlement.

Supporting evidence:
title: dicgc.org.in/guide-to-deposit-insurance
quote: Each depositor in a bank is insured upto a maximum of ₹ 5,00,000 (Rupees Five Lakhs) for both principal and interest amount held by him in the same right and same capacity such accounts are considered as held in different capacity and different right. Accordingly, such deposits accounts will also enjoy the insurance cover up to Rupees Five Lakhs separately
context: ive societies are not insured by the DICGC.
What does the DICGC insure?
The DICGC insures all deposits such as savings, fixed, current, recurring, etc. deposits except the following types of deposits
Deposits of foreign Governments;
Deposits of Central/State Governments;
Inter-bank deposits;
Any amount due on account of any deposit received outside India
Any amount, which has been specifically exempted by the corporation with the previous approval of Reserve Bank of India
What is the maximum deposit amount insured by the DICGC?

Each depositor in a bank is insured upto a maximum of ₹ 5,00,000 (Rupees Five Lakhs) for both principal and interest amount held by him in the same right and same capacity as on the date of liquidation/cancellation of bank's license or the date on which the scheme of amalgamation/merger/reconstruction comes into force/imposition of “All Inclusive Directions” on the bank by the Reserve Bank of India, with restrictions on withdrawal of deposits.
How will you know whether your bank is insured by the DICGC or not?
The DICGC while registering the banks as insured banks furnishes them with printed leaflets for display giving information relating to the protection afforded by the Corporation to the depositors of the insured banks. In case of doubt, depositor should make specific enquiry from the branch official in this regard.
What is the ceiling on amount of Insured deposits kept by one person in different branches of a bank?
The deposits kept in different branches of a bank are aggregated for the purpose of insurance cover and a maximum amount of upto Rupees five lakhs is paid.
Does the DICGC insure just the principal on an account or both principal and accrued interest?
The DICGC insures principal and interest upto a maximum amount of ₹ 5 lakh.
For example, if an individual had an account with a principal amount of ₹ 4,95,000 plus accrued interest of ₹ 4,000, the total amount insured by the DICGC would be ₹4,99,000. If, however, the principal amount in that account was ₹ 5 lakh, the accrued interest would not be insured, not because it was interest but because that was the amount over the insurance limit.
Can deposit insurance be increased by depositing funds into several different accounts all at the same bank?
All funds held in the same type of ownership at the same bank are added together before deposit insurance is determined. If the funds are in different types of ownership or are deposited into separate banks they would then be s