A method for detecting an internal failure in a capacitor bank connected to a power system, wherein the capacitor bank includes a plurality of capacitor units that are divided into two Y sections. Each phase in each of the Y sections defines a leg and each leg includes series and/or parallel-connected capacitor units. The internal failure may occur in one or more capacitor elements or units or involve one or more legs. The method includes measuring the phase current in one of the phases, calculating the root mean square value, denoted by RMS, of the measured phase currents, measuring the unbalanced current between the two sections, calculating the RMS value of the measured unbalanced currents, and detecting the phase angle between the measured phase current and the measured unbalanced current.