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Over ₹32,000 crore is lying as unclaimed deposits with banks and insurance companies, the government informed the Lok Sabha on Monday.
Any account not operated for 10 years is termed as unclaimed account and the amount deposited is considered as unclaimed deposit or amount. In a written response, Finance Minister Nirmala Sitharaman mentioned that unclaimed amount in all scheduled commercial banks (SBI, nationalised banks,private banks, foreign banks, regional rural banks, small finance banks) rose to ₹14,578 crore in 2018 from ₹8,928 crore in 2016. The same with life insurers as of September 30, 2018 is ₹16,887.66 crore and non-life insurance companies hold ₹989.62 crore as unclaimed deposits.
With the help of an amendment to the Banking Regulation Act, the Reserve Bank of India framed the Depositor Education and Awareness Fund (DEAF) Scheme, 2014. In terms of the scheme, banks calculate the cumulative balances in all accounts which are not operated upon for a period of 10 years or more (or any amount remaining unclaimed for 10 years or more) along with interest accrued and transfer such amounts to the DEAF.
In case of demand from a customer whose unclaimed deposit had been transferred to the DEAF, banks are required to repay the customer, along with interest if any, and lodge a claim for refund from the DEAF. The rate of interest payable on interest bearing deposits transferred to the Fund has been lowered to 3.5 per cent (with effect from July 1, 2018) from 4 per cent. The DEAF is utilised for promotion of depositors’ interests and for such other purposes as may be specified by the RBI.
For the insurance sector, the definition of unclaimed amount is same as that of banks. In accordance with the provisions brought in by the Finance Act, 2015, the Centre notified the Senior Citizens’ Welfare Fund (SCWF) Rules, 2015. It was amended during next two years and made applicable to insurers. Entities having unclaimed amounts for more than 10 years are required to transfer the amounts to the SCWF on or before March 1 every year.
The SCWF is utilised for schemes promoting the welfare of senior citizens. If a claim is made, insurers are required to pay the identified unclaimed amount along with the investment income credited to the policyholders or beneficiaries, in line with the procedure.
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