Time to look up our unclaimed deposits

In 2014, RBI directed banks to transfer the outstanding amount in unclaimed depo-sits to the DEAFund.

Bank deposits are simple, secured, safe, liquid and convenient means of savings at a reasonable, but assured, return. For a common people, bank deposits forms a major part of their financial savings.

If a savings account is not operated i.e. there is no customer induced transaction for a period of 10 years or more; or the term deposit is not withdrawn i.e. not claimed for 10 years from the due date, these deposits are treated as unclaimed deposits.

Deposits become “unclaimed” on account of a variety of reasons: legal heirs/nominees may not have knowledge of the deposits of deceased depositors; deposits may have been kept in names different from their usual style, may be using a short name/nick name; incomplete address provided; depositor might have forgotten the details, especially when he/she is under a transferrable job; maintaining secrecy of bank accounts and not sharing information with family members; banking with multiple banks etc.

Earlier, banks would enjoy the funds available under unclaimed deposits. In 2014, however, for effective usage of the amount, the RBI directed banks to transfer the outstanding amount under unclaimed deposits to the Depositors Education and Awareness Fund (DEAF) under the RBI. The fund shall be utilised for the promotion of depositors’ interests and for such other purposes which may be necessary as specified by RBI from time to time.

In January 2015, RBI also released guidelines on criteria for seeking financial assistance from the DEAF to be granted to institutions/ organisations/ associations for taking up various activities relating to promotion of bank depositors’ education and awareness.

Banks are now required to transfer these unclaimed deposits with up to date interest on monthly basis to the DEAF. The type of deposits includes savings accounts, fixed/ term deposits, cumulative/ recurring deposit, current accounts, other deposit accounts in any form or with any name, cash credit accounts (with credit balance), loan accounts after due appropriation, margin money against issue of Letter of Credit/Guarantee etc, or any security deposit, outstanding telegraphic transfers, mail transfers, demand drafts, pay orders, bankers cheques, sundry deposit accounts, inter-bank clearing adjustments, unadjusted NEFT credit balances and other such transitory accounts, unreconciled credit balances on account of ATM transactions etc.

Upon receipt of demand from the customer/depositor, banks are required to repay along with interest, if applicable, the unclaimed deposit transferred to the DEAF while lodging a claim for refund from the fund. The interest payable from the fund, if any, shall accrue only from the date on which the balance in an account was transferred to the DEAF to the date of payment to the customer.

In the case of a claim for refund of foreign currency denominated deposit accounts, the banks shall be entitled to claim refund of the eligible amount in INR only. The in-operative account can be converted to operative at the option of the depositors.

Legitimate dues
The RBI Annual Report – June 30, 2015, indicates outstanding in DEAFund at Rs 7,875 crores as compared with Rs 2,795 (June 30, 2014). This amount with the fund is the legitimate dues from the banking sector to the depositors.

Banks have been attempting to refund unclaimed deposits by sending letters to the last available address of the depositors. During the earlier days of banking, there were no strict Know Your Customer (KYC) norms in place and accounts were opened only with introduction, sometimes even without photographs. Hence, banks are not in a position to locate all the beneficiaries and refund the amount. The action, therefore, to get the amount back from banks should be initiated by the beneficiary-customers.

Banks have taken pro-active steps to find whereabouts of the account holders of unclaimed deposits/in-operative accounts and also display the list of these accounts on their websites. The list contains only the names of account holder(s) and their addresses. If such accounts are of non-individuals, the names of the authorised persons are mentioned too. The account number, its type and the name of the branch are not disclosed. The “find”option is provided to enable the public to search.

The claim process, activating the inoperative account, forms and documents required for claiming are also provided. If anyone is aware of the bank wh-ere the unclaimed deposits are kept or if someone has a memory of his parents/ grant parents/ other relatives having kept their accounts with any bank, they can visit the bank’s website and initiate the action for refund.

The real issue, though, is how a depositor or nominee/legal heirs can identify their “deposits” under unclaimed deposits. Is it feasible to visit the websites of all the banks? Perhaps, the solution lies in providing the entire data of unclaimed deposits in a single website with proper “find/search” option so that the real beneficiary can have a simple means to identify the legitimate account and proceed to claim the amount with the respective banks.

The initiative towards this end can be from the Depositors Education and Awareness Fund (RBI) itself or Indian Bank Association (IBA). This will help the beneficiaries to claim refunds to some extent.

(The writer teaches banking at ICICI Manipal Academy (IMA), Bengaluru)