RBI has stipulated how long each financial institution can hold the money, and how it should use it afterwards
Unclaimed money is money that benefits no one, and India has about 90,820 crore of it.
This is the unclaimed amount, as of December 2020, in various bank accounts, provident fund (PF) accounts, inactive mutual funds, LIC policies, fixed deposits due and unclaimed dividends.
Of that total, 24,497 crore is in unclaimed PF accounts and 24,356 crore in unclaimed bank accounts (up 5,977 crore from 2019), according to data released by the Reserve Bank of India (RBI). The amounts in the inactive MF and LIC policies are 17,880 crore and 15,167 crore respectively.
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The RBI has advised banks to take a more proactive role in locating unclaimed deposit account holders / inoperative accounts.
Following an amendment to the Banking Regulation Act 1949 and the insertion of Section 26A, the RBI developed the Depositor Education and Awareness Fund (DEAF) scheme, 2014. This was further notified by notification in the Gazette of May 24, 2014. Under this scheme, unclaimed funds are used to promote the interests of depositors through the DEAF.
An impressive number of accounts
The numbers, in terms of accounts, are just as staggering. According to RBI data, 8.13 crore accounts go unclaimed at banks across the spectrum – public sector, private, foreign, regional rural, and others. Unclaimed deposits include money in current and savings accounts, term deposits and other deposits (such as recurring deposits, payment orders, etc.) with banks.
An account is considered dormant or inoperative if there has been no transaction (other than interest credited or management fees charged) for at least two years. The bank is obliged to contact the customer by e-mail or telephone in this regard.
According to RBI regulations, if a bank account remains inoperative for at least 10 years, the money can be transferred to the DEAF fund. All that money is transferred to the fund every month.
Nomination is crucial
According to bank and FP officials, the reason many accounts go unclaimed is that account holders die without naming a nominee. “In many cases, family members did not know that such an account was there. Many were surprised to know that a few thousand lakhs are in the account of a head of household after his death, â€said a bank official.
According to RBI standards, banks must upload details of unclaimed accounts on their respective websites. After verifying the details, an account holder or family member can come to the bank branch with a completed claim form, deposit receipts, and know your customer’s documents (KYC) to claim the silver.
