Page 50 - Banking Finance April 2022

FEATURE

DEALING WITH

UNCLAIMED BANK

DEPOSITS

U nclaimed deposits are commonly defined as was steeper than that of accounts (CAGR=24.9 per cent),

implying that increasing number of relatively large deposit
those deposits which are lying in accounts not
operated for a period of 10 or more years.
accounts was becoming unclaimed, which is puzzling and a
Section 26 of the Banking Regulation Act, 1949
requires banks to submit to RBI information about these matter of concern.
accounts within 30 days after each calendar year ends. Massive jump
Unclaimed deposits can be claimed by their legal owners
The average amount outstanding per account increased by
after satisfying certain conditions prescribed by RBI.
35.2 per cent from Rs. 2,215 in 2011 to Rs. 2,995 in 2020
after a peak of Rs. 3,521 in 2013. The savings bank portfolio
However, several common citizens, including the financially
sophisticated ones, are observed to be ignorant of the had the highest incidence of unclaimed deposits — three-
fourth of the total unclaimed accounts and two-third of the
provisions and processes involved. This has led to proliferation
of inoperative accounts and unclaimed deposits in the total amount.
banking system.
Public Sector Banks (PSBs), obviously, had the highest share
both in terms of number of accounts (84 per cent) and
As per Section 26A of the amended Banking Regulation Act,
1949, money lying in dormant bank accounts is transferred amount outstanding (83 per cent).
to the Depositor Education and Awareness Fund (DEAF)
within a period of three months from the expiry of the We tried to compute the extent to which unclaimed deposits
above-said 10 years. are claimed back by the depositors or their legal claimants.
This exercise was carried out for the financial year 2020-21
The depositor is, however, entitled to claim from the bank by collecting the relevant data from the balance sheets of
her/his deposit or any other unclaimed amount or operate 12 PSBs, 12 old private banks and nine new private banks.
the account after the expiry of 10 years, even after such
Among the PSBs, only 1.26 per cent of the unclaimed
amount has been transferred to DEAF. The bank is liable to
pay the amount to the depositor/claimant and claim refund deposits outstanding at March-end 2021 was claimed back
of such amount from DEAF. with a range of 0.35 per cent to 2.25 per cent. For old
private banks, it was 1.22 per cent with a range of 0.44 per
The growth path of the number of unclaimed accounts and cent to 1.74 per cent, and for new private banks, it was 0.79
amount outstanding at December-end during the decade per cent with a range of 0.32 per cent to 3.05 per cent.
2011 to 2020. During this period, both continuously Thus, a very small proportion of unclaimed deposits is
increased, barring a nominal dip in 2014 in respect of the actually claimed back.
latter.
The most important reason for a deposit account becoming
The growth of amount outstanding (CAGR=29.1 per cent) unclaimed is the death of the depositor without a

50 | 2022 | APRIL | BANKING FINANCE