Unclaimed deposits: retrieve your money, else it goes to RBI

For a common man, bank deposits continue to be a major avenue to park his savings. Bank deposits are most convenient, simple, secured, safe and liquid, with assured returns. Banks also have wide reach. Even the affluent invest a part of their savings in banks.

Savings account holders are required to operate their account regularly and if there is no customer-induced transaction for one year, the account is treated as 'inactive', after two years, 'dormant' and after 10 years as 'unclaimed deposits'.

Besides savings accounts, unclaimed deposits include other deposits not claimed for a period of 10 years and above: fixed/term deposits from the due date, current accounts (from the last customer induced transactions), any other deposits in any form like credit balances in cash credit/overdraft, loan accounts after due appropriation, margin money against issue of letter of credit/guarantee or security deposit, outstanding remittances not credited to the beneficiary's account, etc.

The reason for depositors not claiming their deposits are many: banks do not inform of the details of the deposits to others to protect customer secrecy. Some depositors do not share the details with their family members. The present KYC norms were not in vogue earlier - making it difficult for banks to locate the beneficiary.

A few depositors fail to keep track on their deposits. Deposits are kept in multiple banks, and under different names. The address provided may be incomplete or the depositors might have moved to a new location. The nominee may not have information on the deposits and legal heirs/nominees may not have knowledge of the deposits of deceased depositors, or a part may be benami deposits.

These unclaimed deposits were earlier with the banks. From 2013-14, as per RBI direction, these deposits are transferred to Depositors' Education and Awareness Fund (DEAF) under the RBI. The fund is to be utilised for the promotion of depositors' interests and other such purposes identified by the central bank. Banks are now required to transfer these deposits with up to date interest on periodical basis to DEAF.

Before transferring the amount, banks attempt to locate the depositor/nominee to refund the amount with applicable interest. The interest payable from the fund, if any, accrues only from the date on which the balance in an account was transferred to DEAF to the date of payment to the customer. The inoperative account can be converted to operative at the option of the depositor.

Besides the pro-active steps to find the whereabouts of the beneficiaries, banks display the list of these accounts on their websites containing only the names/address of account-holders. If such accounts are of non-individuals, the names of the authorised persons are also mentioned.

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 where the unclaimed deposit is kept or if someone has a memory of his relatives having kept their account with any bank, they can visit the bank's website and initiate action to get the refund.

Reality check

Despite the steps taken by banks/RBI, the reality check indicates rapid increase in the outstanding in DEAF. As per the RBI's annual reports, the amount in DEAF in June 2017 was Rs 14,697 crore (Rs 10,585 crore – June 2016; Rs 7,875 crore - June 2015; Rs 2,795 crore - June 2014). The RBI enjoys these funds free of cost and the payment of interest is contingent on the claims.

Leading public sector banks continue to transfer amounts to DEAF. As on March 2017, the State Bank of India (SBI) had cumulatively transferred Rs 1,081.42 crore (during FY17 - Rs 201.64 crore); the Punjab National Bank had transferred Rs 1,196.33 crore (during FY17 - Rs 537.54 crore); and the Bank of Baroda had transferred Rs 403.77 crore (during FY17 – Rs 87.63 crore). Even leading new generation private banks have transferred substantial amounts. The cumulative amount transferred from ICICI Bank is Rs 484.12 crore
(Rs 134.60 crore in FY17); HDFC Bank - Rs 230.50 crore (Rs 95.10 in FY17); and Axis Bank has transferred
Rs 64.90 crore (Rs 24.23 crore in FY17).

Despite the system put in place to claim, the amount claimed from DEAF is dismally low. The amount claimed/settled by the depositor/nominee/legal heirs during FY17 was Rs 1.14 crore in SBI, Rs 17.79 crore in Punjab National Bank and Rs 0.45 crore in Bank of Baroda. In ICICI Bank, it was Rs 8.89 crore, HDFC Bank, Rs 1.45 crore and at Axis Bank, Rs 90 lakh.

Even if legal heir/nominee has some clue (not full particulars of the bank where the money is kept) of the unclaimed deposits of a deceased depositor, they cannot identify these deposits at ease.

Why can't RBI or the Indian Banks Association provide the entire data of unclaimed deposits on a single website with proper "find/search" capability? It is desirable to add the names of nominees in the data to facilitate identification as they may not be aware of the nomination. The regulator should initiate further steps so that legitimate/genuine beneficiaries get their money easily. The performance of the RBI is to be measured in terms of the claims settled, not in terms of the amount accumulated in its DEAF account.

(The writer is faculty, ICICI Manipal Academy, Bengaluru)