Reserve Bank of India (RBI) today has announced one more customer friendly initiative.
RBI vides Notification No RBI/2011-12/389 DBOD.No.Leg.BC. 81/09.07.005/2011-12 dt.February 7, 2012 addressed to All Scheduled Commercial Banks, advised banks to display the list of the Inoperative Accounts. The complete notification can be viewed at RBI notification.
Detailed instructions to Banks for dealing with unclaimed deposits / inoperative accounts, has been given in Circular DBOD.No.Leg.BC.34/09.07.005/2008-09 dated August 22, 2008, 2008 Notification
The highlights of the circular dt 22/08/2008 are:-
Banks advised to find the whereabouts of the customers and their legal heirs.
Annual review of accounts in which there are no operations,
Operations in such accounts to be allowed after due diligence
No charge to be levied for activation of inoperative account, etc.
As the numbers of such Unclaimed Deposits/ Inoperative Accounts are on the increase, RBI felt that Banks should play more a more pro-active role in locating the account holders of Unclaimed Deposits/ Inoperative Accounts.
At present, such data is not in public domain, hence the legal heirs/account holders may not be aware that monies are due to them.
Hence, vide today’s circular RBI has advised Banks to display such information on their website too.
The top 10 point’s of the circular are:-
Banks should display the list of unclaimed deposits/inoperative accounts which are inactive / inoperative for ten years or more on their respective websites.
The list so displayed on the websites must contain only the names of the account holder(s) and his/her address in respect of unclaimed deposits/inoperative accounts.
In case such accounts are not in the name of individuals, the names of individuals authorized to operate the accounts should also be indicated.
However, the account number, its type and the name of the branch shall not be disclosed on the bank’s website.
The list so published by the banks should also provide a “Find” option to enable the public to search the list of accounts by name of the account holder.
Banks should also give on the same website, the information on the process of claiming the unclaimed deposit/activating the inoperative account and the necessary forms and documents for claiming the same.
Banks are required to have adequate operational safeguards to ensure that the claimants are genuine.
Banks should complete action as above by June 30, 2012 and keep their websites updated at regular intervals.
As at December 2010, 1700+ crores are unclaimed deposits in the Indian Banking System. The detailed table can be viewed at Unclaimed Deposits
What are unclaimed deposits?
According to rules laid down by Reserve Bank of India, 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.
Why are deposits unclaimed ?
The top three reasons are :
The account holder has forgotten about holding the bank deposits.
The account holder dies and the legal heirs are not aware of the bank deposits
The bank deposits are under dispute, as the legal heirs or other claimants are unable to arrive at a decision on the sharing pattern.
Why do bank accounts become inactive?
The top three reasons are:
The bank accounts are salary accounts and the account holders on shifting to other jobs, cease to operate these bank accounts.
These account holders relocate to other cities and towns, making it difficult for an account holder to maintain the account. This is especially true before the CBS (Core Banking System) era.
The account holders open accounts with other banks, and are no longer interested to operate their old accounts.
What are options available to the Banks for handling unclaimed deposits/inoperative accounts?
1)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 above notification will make it easier for Account Holders/Legal Heirs to 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.
The main worrying point is, if the rightful claimants have died without providing any information about their bank account details to their kin.
The most important part of the notification, is that RBI has stated that there should be a ‘FIND’, option.
What are interest rules for unclaimed deposits/inoperative accounts?
a) Interest on savings bank accounts should be credited on regular basis whether the account is operative or not.
b) If a Fixed Deposit Receipt matures and proceeds are unpaid, the amount left unclaimed with the bank will attract savings bank rate of interest.