Approximately 18,000 crore unwanted deposits were deposited with banks in the calendar year 2019, from, 14,307 crore in 2018, according to data released by the Reserve Bank of India (RBI).
Under the rules of the central bank, deposits are classified as unclaimed if idle for 10 years or more. Statistics show that although your customer service (KYC) standards have been improved, banks are still unable to keep track of their depositors.
Public sector banks have the largest share of unrecognized deposits at ₹ 14,971 crores, followed by private sector banks (₹ 2,472 crores) and foreign banks at ₹ 455 crore. Banks transfer unwanted money for 10 years or more to the Depositors Education and Awareness Fund and display a list of such accounts on their websites.
In 2015, the RBI asked banks to try harder to find these account holders. In view of the public interest, it has been decided that banks should play a significant role in acquiring owners of unwanted deposit accounts and non-performing accounts.
The central bank asked lenders to ensure that the list of depositors did not contain only the names of the account holder and his address. It is to be noted that the account number, branch name, and type (which does not apply to banking units) will not be disclosed on the bank’s website.
The total amount may be higher, but the amount claimed by each applicant will be less, according to the central bank. That is because the total number of such accounts stands at 61.17 million. The estimated unclaimed amount was ₹ 2,926, reflecting information from the RBI.
It’s definitely not like that a customer has forgotten a lot of money in his account. As a matter of fact it is so small that it doesn’t matter. The customer has moved to another city or country. For a bank to make an effort to get these customers will be more expensive than an unwanted deposit, said the bank owner. Data show that savings accounts account for 66% of total revenue in 2019.
Following an amendment to the Banking Regulation Act, in 1949, Section 26A was inserted into the Act, allowing the RBI to establish an Education and Investment Awareness Fund. The fund is used to raise interest rates for investors. However, the depositor will still be able to claim the money from the banks even if it has been transferred to the fund and the bank may require a refund of that fund.