Unclaimed Deposits in the Indian Banking Sector and the Role of RBI
We all are
well aware that the Reserve Bank of India, since its establishment in 1935, has
repeatedly proven that it is the only potent body that has held the Indian
financial market’s stability at its clenches. It is an obvious known fact that
the responsibility of safeguarding the bank deposits of the Indian citizens
lies upon the shoulders of the RBI.
In this
regard, it is notable that the RBI had formulated a scheme known as Depositor
Education and Awareness Fund (“DEA Fund”) Scheme in the year 2014. This
scheme envisages the duty of RBI towards the valuable deposits made by the
banking customers across the country. At the same time, the scheme altogether
has stiffly backboned the citizen’s banking rights.
On the other
hand, it can be said that this scheme has added its contribution to the
promotion of Banking Rights Education in our country as it aims at the creation
of public awareness with respect to the Depositors’ Rights.
Unclaimed
Deposits in the Indian Banking Sector
Since the
recent decades, many cases with respect to the unclaimed deposits / inoperative
accounts that are inactive have been recorded in the Indian Banking Sector. Any
account with no transactions for two years is considered as a dormant account.
Wherefore, the RBI, in order to protect the interest of the public, has
directed the banks to display the list of unclaimed deposits on their
respective websites. However, those banks which do not maintain any websites
have the provision of displaying on their respective branches.
Why Depositor
Education and Awareness Fund Scheme, 2014?
The very
purpose of Depositor Education and Awareness Fund Scheme is to consolidate the
overall amounts from all the dormant accounts in the form of the fund called DEA
Fund. As per the terms of the scheme, the banks are ought to calculate the
cumulative balances in all such accounts and transfer the amount to the DEA
Fund on the last working day of the subsequent month. However, the most
interesting part of this scheme is that the banks are obligated to transfer the
said amounts from the dormant accounts to the DEA Fund along with the interest
accrued thereupon.
The rate of
interest payable on interest-bearing deposits transferred to the DEA Fund was
initially 4% per annum which has been changed to 3.5% per annum with effect
from July 2018. Therefore, as per the said scheme, the banks are ought to
update the list of unclaimed deposits / inoperative accounts which are
inactive/inoperative for ten years or more on a monthly basis.
The RBI, to
establish the DEA Fund, is empowered by Section 26A of the Banking Laws
(Amendment) Act, 2012. On May 24, 2014, the RBI notified the establishment of DEA
Fund in the Official Gazette.
How the DEA
Fund Scheme, 2014 is utilized?
The fund has
been created and all banks have been advised to transfer the balances in
inoperative deposit accounts that have not been claimed or operated for a
period of ten years or more or any deposit or any amount remaining unclaimed
for more than 10 years to the DEA Fund. The depositors, however, are entitled
to claim from the bank his deposit or operate his account after expiry of ten
years, even after the unclaimed deposit funds have been transferred to the DEA Fund.
The bank is liable to pay the deposit amount to the depositor and claim a
refund of such amount from the DEA Fund.
As a governing
authority of this scheme, the RBI has provided in the said scheme for the
establishment of a committee to administer and manage the fund in an
appropriate manner.
Also, the most
highlighting part of this scheme is the awareness methodologies adopted to
build up a strong educational stand amongst the banking customers which
includes the conducting awareness programs, organizing seminars, symposia,
etc., including research activities.
Present Status
of Unclaimed deposits in India
It was noted
that at the end of the previous year, the total unclaimed deposits in banking,
as well as the insurance companies, had reached around INR 32,000 crore wherein,
the commercial banks had around INR 14, 578 crore as unclaimed deposits.
However, it was noted that the overall figure of this amount had increased when
compared to the previous years’ i.e., 2017-18. On the other hand, the general
insurance firms had held around INR 17, 887 Crore whereas Life Insurance
Corporation (LIC) alone has an unclaimed amount of INR 12, 892 crore and the
State Bank of India holds around INR 2,156 crore.
However,
another scheme just like that of the DEA Fund Scheme, 2014 known as Senior
Citizens’ Welfare Fund (SCWF) Rules was introduced in 2015. “As per the
Rules, entities having unclaimed amounts for more than 10 years are ought to
transfer the amounts to the Senior Citizens’ Welfare Fund (SCWF) Rules (SCWF)
on or before 1st March every year,” for promoting the welfare of senior
citizens.
Conclusion
It was noticed that the scheme
has added its support to the promotion of Banking Rights Education in our
country. It is because the scheme aims at the creation of public awareness with
respect to the Depositors’ Rights and the most Interesting
part of this scheme is the awareness rehearses accepted to build up a solid educational
stand amongst the banking customers which includes the conducting awareness
programs, organizing seminars, conferences, etc., including research
activities.
Contributed By – Akshay Ramesh & Gokul.L
Designation – Associate
King Stubb & Kasiva,
Advocates & Attorneys
New Delhi | Mumbai | Bangalore | Chennai | Hyderabad | Kochi
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