Reserve Bank of India asks banks to label inactive accounts 'dormant'

The other day I logged into one of my old bank accounts. To my surprise, there was nothing there. On enquiry, I was informed that the account has been classified as 'dormant', as I had not operated it for quite some time", this is often-heard today.

If there has been no transaction in your savings bank account for two years, except for interest payments credited by your bank, the bank will classify your account as inoperative or dormant. You will not be able to use your ATM card, issue cheques or transact in the account without reactivating it.

For the purpose of classifying an account as inoperative, both the types of transactions - debit as well as credit transactions - induced at the instance of the account holder as well as a third party should be considered. Recently, the Reserve Bank of India (RBI) asked banks to track dormant accounts, so they can either be revived, or the balance can be transferred to a new account or the legal heirs. According to the RBI, there are 10 million dormant accounts in the banking system. These dormant accounts have unclaimed deposits of around Rs 1,700 crores


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Rs 1,360 crore lying unclaimed in Indian banks

Indian banks have over Rs 1,360 crore unclaimed amount, enough to run Central government hospitals and dispensaries for a year or provide funds to farmers under the National Horticulture Mission. Any bank account, not been operated for a decade, turns inoperative and the money is transferred to the

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bank’s suspense account. There are over one lakh inoperative accounts with Indian banks, each having on average Rs 1,350, the RBI said in a RTI reply. Over 75 % of these accounts are of savings.

Although the Reserve Bank of India has asked banks to issue notices to account holders to take back the money back along with the interest, the banking regulatory is not willing to transfer the money to the government as done in case of unclaimed dividend from the companies.

"There is no scheme under consideration of RBI whereby such unclaimed deposits in banks including those in inoperative accounts may be transferred to some government account after a specified period," said D Mahapatra, RBI’s Central Public Information Officer.

After the RTI applicant Subhash Aggarwal sought information on money in suspense accounts, the RBI woke up and issued a new circular in July 2010 asking the banks to review the accounts where there have been no operations for more than a year and inform the account holder about the same in writing.

"Banks are taking every step to ensure that unclaimed money lying with them is safe and not misused," T M Bhasin, chairman and managing director, Indian Bank told Hindustan Times. Chairman of a public sector bank said in case of any transaction, which may happen after that period, will be monitored closely to ensure that there is no fraudulent activity.

The RBI has admitted that it has received complaints of customers facing problems in operating the accounts termed as inoperative and unwillingness of the banks to pay interest on the money in these accounts.

The country top-banking regulator has asked the banks to make all efforts to locate the customer and in case, it fails to find the person, the bank should contact the person who introduced the account holder. "Banks can consider a special drive to find the whereabouts of the customers," the RBI had said.

The nationalized banks have around Rs 988 crore in inoperative banks followed by State Bank of India and Associate banks, private sector banks and foreign banks.

Article Courtsey - http://epaper.hindustantimes.com/PUBLICATIONS/HT/HD/2011/03/09/ArticleHtmls/R1360-crore-lying-unclaimed-in-banks-09032011010034.shtml?Mode=1

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EPFO not sure who own Rs 36K cr

The Employment Provident Fund Organisation (EPFO), which maintains the PF accounts of all formal sector employees, does not know to exactly whom Rs 36,000 crore of its corpus belongs to. The amount, part of its five-lakh-crore-rupee corpus, has been accumulating from 4.7 crore accounts that have not been updated for years. These are separate yearly accounts of individuals who, EPF officials estimate, form 25% of its 5.7-crore subscriber base.

The accounts assume significance when there is a face-off between the labour and finance ministries over the 9.5% interest rate promised to EPF subscribers about five months ago.

Raising objection to the rate for 2010-11, recommended by the Central Board of Trustees in their September meet, the finance ministry wanted an update on these accounts before notifying the higher rate.

Samirendra Chatterjee, central provident fund commissioner, told HT that the unusually long time taken for settling the unattended accounts is mainly because the authorities have to go back and forth to get the full details of subscriptions.

He said EPFO was computerising all its 120 offices and started receiving contribution forms in CDs.

http://www.hindustantimes.com/EPFO-not-sure-who-own-Rs-36K-cr/Article1-662910.aspx


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New a/c for 1,400cr lying unclaimed with banks

NEW DELHI: 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.

http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/New-a/c-for-1400cr-lying-unclaimed-with-banks/articleshow/7039690.cms

More on the subject at -

http://www.thaindian.com/newsportal/business/rs1360-crore-unclaimed-money-lying-with-banks-mukherjee_100469132.html


We can help you in claiming the Unclamed shares and dormant bank accounts if the holder is deceased and you are a legal heir. We can provide you with our services of tracing such assets and initiating the legal procedures in India to claim the same.

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