Deposit Insurance Fund

The Deposit Insurance Fund (DIF) is a Reserve maintained by the Federal Deposit Insurance Corporation (FDIC) to protect depositors' funds in case a bank fails. If a bank becomes insolvent, the DIF uses this reserve to cover customer deposits, up to the insured limit, ensuring that depositors do not lose their money. This system helps maintain confidence in the banking system by providing a safety net and reducing the risk of bank runs. The DIF is funded mainly through insurance premiums paid by member banks, and it is designed to remain solvent so it can protect depositors when needed.