Unclaimed deposits of bank account holders have crossed a record Rs 8,000 crore, with stricter KYC norms making extraction of funds difficult unless the next of kin of the deceased can establish the legitimacy of their claims.
According to the latest figures released by the Reserve Bank of India (RBI), Rs 8,864.6 crore is lying unclaimed in 2.63 crore accounts with all bank groups as of December ’16. Ironically, unclaimed deposits have doubled in four years between 2012 and 2016 – both by way of volume and value – despite increasing policy support for genuine deposit holders seeking to withdraw funds.
The number of accounts where funds remained unclaimed has doubled from 1.32 crore in 2102 to 2.63 crore in 2016. By way of value, too, unclaimed deposits have more than doubled from Rs 3,598 crore to Rs 8,864.6 crore in the same period.
The RBI has advised banks to display the list of unclaimed deposits that are inactive for at least 10 years on their respective Web sites. The list must contain the names of the account holders and their addresses so that it becomes easier for claimants to access.
Unclaimed fixed deposits or savings and current accounts are transferred to a bank’s head office from a branch after 10 years.
Individual banks are required to submit a return to the RBI within 30 days of the close of the calendar year for all accounts that have not been operated for 10 years.
The country’s largest lender State Bank of India tops the list, with Rs 1,036 crore lying in 47 lakh inactive accounts that include both term deposits and CASA. Canara bank follows with Rs 995 crore in 47 lakh inactive accounts, and Punjab National Bank with Rs 829 crore in 23 lakh inactive accounts.
The unclaimed money is not free cash for banks. Interest on savings bank accounts should be credited regularly regardless of an account’s status. If a fixed Deposit Receipt matures and proceeds are unpaid, the amount left unclaimed with the bank will attract the savings bank rate of interest. Besides, banks have to park 4% as cash with the RBI as Cash Reserve Requirement.
RBI has advised banks to ensure proper audits of funds lying in inoperative accounts. Since 2015, the balances in unclaimed deposits are to be parked by the bank in its Deposit Awareness and Education Fund until any claim is settled, and these funds ought to be used for enhancing financial literacy.