Banks could lose nearly Rs 1,400 crore of cheap funds lying in unclaimed deposits with the government deciding to create a fund to park these moneys and use it for depositor education.
Funds in deposit accounts that have not been operated for more than 10 years will be credited into a “depositor education and awareness fund”, Finance Minister Pranab Mukherjee informed Parliament in a written reply to a question.
“The government is contemplating to amend the Banking Regulation Act, 1949 for creating the Depositor Education and Awareness Fund,” finance minister said adding that the fund was conceived in consultation with the Reserve Bank of India.
The depositors will get their money back if they make a claim later, along with interest at the rate decided by RBI.
Currently, banks treat unclaimed deposits as regular deposits. The total amount outstanding under these deposits as on December 31, 2009 was Rs 1,360 crore.
Canara Bank has over Rs 218 crore lying unclaimed while Punjab National Bank and Union Bank of India have over Rs 160 crore and Rs 100 crore in idle accounts.
The proposed depositor education fund will be run by an authority or committee constituted by RBI.
Banks will have to credit the funds into the account within three months of a dormant account becomes 10 years old.
The move will help clear the administrative burden of unclaimed deposits and also prevent their possible misuse. At the end of December 2009, there were more than one crore such accounts with scheduled commercial banks.
Recently, even the Employees’ Provident Fund Organisation had decided that it will stop paying interest on accounts that had not received any contribution for more than three years.
The organisation hopes this will encourage subscribers to settle the accounts that are clogging the system.
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