What if, RBI imposes restrictions like PMC Bank on your bank?

Every Bank (be it Public or Private or Co-operative) needs to be covered under DICGC ( Deposit Insurance and Credit Guarantee Corporation). As per DICGC rules, each depositor in a bank is insured up to Rs 1 lakh for both the principal and interest amount held with the bank. This includes all deposits held in current account, savings account, fixed deposits and so on. If the total of all the deposits held exceeds Rs 1 lakh, then one will be able to get only up to Rs 1 lakh inclusive of principal and interest amount if the bank goes bankrupt.

Even though Co-operative Banks offer higher interest rate, it is advisable, not to deposit huge amount there because RBI controls them partially. Also, never deposit all your savings in one bank.