The government has directed state-run banks to make public details of unclaimed deposits aggregating 1,700 crore built up over the last several years to encourage account holders to reclaim funds parked with these banks and to ensure greater transparency.
Last week, the finance ministry told all PSU banks to display a list of inoperative accounts and the names of such account holders on their websites, senior bankers confirmed. Lenders will also have to make public the last address of the account holder as listed in their records as well as the branch of the bank, in which the account has been classified as inoperative.
According to rules laid down by RBI, a savings bank account is classified as an inoperative account two years after the last entry for interest is credited against a fixed deposit or a savings bank account. In banking parlance, a bank account is classified as inoperative or dormant either after the death of the account holder or when an account is not maintained or business transacted for over two years.
This normally happens when many of these account holders relocate to other cities and towns, making it difficult for an account holder to maintain the account.
Over the last few decades, the unclaimed amount spread over 1.03 crore bank accounts, has risen to 1,700 crore with India's largest bank, SBI, and its associates topping the list with unclaimed deposits of 279.7 crore.
Banks have no option but to hold on to these funds unlike companies where unclaimed dividends, deposits and debentures, which have matured and not been claimed for seven years, are transferred to the Investor Education and Protection Fund, which is administered by the ministry of corporate affairs.
The corpus is utilised for investor awareness programmes and for investor protection.
Account holders may be better off as they can stake a claim to funds lying unused in their accounts for years once they are able to prove their credentials to bank officials. In other words, a depositor can activate his or her account anytime by providing proof of identity.
However, in the event of the death of a customer, the legal heirs will have to provide a death certificate and furnish evidence of being the rightful claimant to the money.
Canara Bank CMD S Raman said the government move was aimed at facilitating the process of reclaiming deposits. "If the move helps in restoring money to the rightful claimants, it will be great," he said. However, a senior banker said banks could be at risk due to the latest move if fraudulent claims are made by people with similar sounding names.
He said this is particularly worrying if the rightful claimants have died without providing any information about their bank account details to their kin.
At last count after SBI, Canara Bank topped the list with unclaimed deposits of 274.6 crore followed by Union Bank at 163.6 crore. ICICI Bank had unclaimed deposits of 74.2 crore and ING Vysya at 30.2 crore.
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