HYDERABAD: We’ve heard of money going out of sight, but ever thought of money going out of mind? Believe it or not, a staggering Rs 19,567 crore is lying unclaimed in government vaults as on June 2018. This is 33 per cent higher than the previous year when unclaimed deposits stood at Rs 14,697 crore. The money rightfully belongs to depositors, who probably don’t know that such a sum exists.
Hence, it’s parked with RBI’s Depositor Education and Awareness Fund (DEA Fund), which is created to take over bank accounts and deposits that have not been operated or claimed for over 10 years. Until claims are settled, these funds are to be used to enhance financial literacy. Unclaimed funds, even if they are transferred to DEA Fund, can be reclaimed by customers after following due procedures.
At Rs 19,567 crore, unclaimed deposits shot up 73 per cent since 2017, when a whopping Rs 11,302 crore belonging to 3.47 crore account holders was lying idle in 64 banks, including public, private and foreign lenders. Interestingly, unclaimed stocks, bonds, contents of safe deposit boxes, insurance proceeds and other valuables aren’t reported by banks and other financial institutions. Such disclosure could further shoot up unclaimed financial assets.
Experts say a part of the unclaimed deposits accumulates probably because the next of kin of the deceased either are unaware or cannot establish the legitimacy of their claims. But this money is not free cash for banks. Interest on savings bank accounts should be credited regardless of an account’s status, while unclaimed deposits too attract the savings bank interest rate.
As per Section 26 of the Banking Regulation Act, 1949, when money remains unclaimed for 10 years or more, banks have to transfer the cumulative balance to the DEA Fund on the last working day of the subsequent month along with the interest accrued. RBI also mandates banks to conduct audits of inoperative accounts from time to time, besides making efforts to reach out to customers.
Savings and current accounts become dormant if there are no transactions initiated either by the customer or a third-party for two successive years. If a term deposit matures and the proceeds remain unclaimed, it gets converted into an interest-bearing demand deposit but fetches savings account interest rate of the respective bank.
SBI tops the list with Rs 1,262 crore lying in inactive accounts, followed by Punjab National Bank at Rs 1,250 crore. As on 2017, public sector banks together had the highest unclaimed deposits aggregating Rs 9.552 crore, while private banks had Rs 1,416 crore, followed by foreign banks at Rs 332 crore. A year before, all 64 banks had Rs 8,864.6 crore lying dormant in 2.63 crore accounts.
What are unclaimed deposits?
How to claim?
Legal heirs can reclaim the money following due procedures like attaching the death certificate of the primary account holder, and other papers. Each bank website publishes list of inoperative accounts and unclaimed deposits, and the process of reclaiming the same. After verification, the respective bank lodges a claim for refund to be repaid to the depositor