Page 8 - Banking Finance September 2025

BANK UPDATE

without legal paperwork. In the absence banks account for over Rs. 58,000 The report attributes this to mass ac-
of nominees, claims up to Rs. 15 lakh crore, with SBI topping the list, while count openings under Jan Dhan Yojana,
will require a legal heir declaration and private sector banks account for Rs. which added 450 million Indians to the
NOC from other heirs; higher amounts 8,600 crore, led by ICICI Bank. NBFCs formal banking system by April 2022.
need succession documents. Lockers are exempt from transferring un- Distance from financial institutions,
follow a similar framework. claimed deposits to the DEA fund. lack of trust, and absence of need were
major deterrents.
The new RBI (Settlement of Claims) Minister of State for Finance Pankaj
Directions, 2025, aim to ensure swift Chaudhary stated that RBI has advised Additionally, 40% of respondents said
resolution, reduce harassment for le- banks to publish lists of unclaimed de- they lacked sufficient funds to use the
gal heirs, and improve awareness on posits, trace customers or legal heirs, account, and 30% admitted to discom-
nominations. Standardised forms and and ensure redressal mechanisms are fort in handling accounts indepen-
increased outreach will support in place. Banks must also maintain a dently. These findings raise concerns
smoother implementation. board-approved policy for classifying over the depth of financial inclusion in
and managing such deposits. India, despite high account ownership
Banks hold over Rs. 67,000 rates.
35% of Indian bank ac-
crore in unclaimed depos-
counts inactive, says Axis Bank Q1 profit falls
its: Finance Ministry
World Bank 4% due to technical provi-
Indian banks are sitting on more than A World Bank report has revealed that sioning hit
Rs. 67,000 crore in unclaimed depos-
its, as per data presented by the Fi- 35% of Indian bank accounts remain Axis Bank reported a 4% year-on-year
inactive, citing the Jan Dhan Yojana as
nance Ministry in the Lok Sabha. Un- a key factor behind this trend. The decline in net profit to Rs. 5,806 crore
claimed balances include inoperative "Global Findex 2025" study highlights for Q1 FY26, impacted by higher pro-
savings and current accounts for over that India's account inactivity is signifi- visions linked to a technical adjustment
10 years, and term deposits not in loan classification. This one-time in-
cantly higher than the 5% average ternal recalibration of cash credit,
claimed within 10 years from maturity.
among developing economies. Inactive overdraft, and one-time settled ac-
These are transferred to the Depositor accounts are those with no customer- counts resulted in Rs. 2,709 crore of
Education and Awareness (DEA) Fund initiated transactions for over 12 fresh slippages, leading to Rs. 821
maintained by the RBI. Public sector months. crore in additional provisions.

Without this, provisions would have
PSBs collect Rs. 9,000 crore in minimum balance pen-
been Rs. 3,127 crore, compared to the
alties over five years reported Rs. 3,948 crore. The bank
Eleven public sector banks (PSBs) collected approximately Rs. 9,000 crore clarified this move was not indicative
as penalties for non-maintenance of minimum balance in savings accounts of actual asset quality deterioration
over the last five years, as disclosed in Parliament. While SBI waived such but a "prudential application" of regu-
charges in 2020, other PSBs like Canara Bank, Bank of Baroda, and PNB latory guidelines. Gross non-perform-
followed suit only recently, starting Q2 FY26. ing assets (NPAs) rose 29 basis points
quarter-on-quarter to 1.57%, while net
Private sector banks, which levy higher charges, have yet to announce simi-
NPAs increased 12 basis points to
lar waivers. Exempt categories include Jan Dhan, salary, and basic savings 0.45%.
accounts. The Finance Ministry noted that banks were advised to rationalise
penal charges, especially for semi-urban and rural customers. Despite the hit to net profit, the bank
maintained stable operational perfor-
As per RBI norms, such charges must be proportionate to the shortfall, and mance, with steady growth in rev-
policies must be board-approved. Minister of State for Finance Pankaj enue, loans, and fee income. Axis Bank
Chaudhary stated that efforts are ongoing to make banking fairer and more described the adjustment as a one-off
inclusive. Remaining PSBs are expected to align soon with the Ministry's rec- event to ensure compliance with evolv-
ommendation. ing RBI guidelines.

8 | 2025 | SEPTEMBER | BANKING FINANCE