Processing .....please wait.. 
The article has been forwarded.... 
1200 Crore lying unclaimed with banks
By siliconindia
|
Friday, 11 December 2009, 14:49 IST |
40 Comments
1,188 crore are lying with Indian banks in 1.92 crore inactive or dormant accounts as of December 2008, according to the data released by the Reserve Bank of India (RBI) recently.
Though they continue to remain in the banks' books as liabilities there is no one claiming ownership for these accounts, reports Economic Times. An account is classified as 'dormant' if there are no transactions for more than two years. Money lying in these accounts are classified as unclaimed deposits if no one comes forward to claim ownership for at least 10 years.
Though the funds in these accounts remain in the banks books, they are transferred from the branch account to a head office account after ten years of being dormant, said a senior official with a public sector bank. Bankers say there are a number of reasons why accounts remain unclaimed. One reason is when people move jobs or locations they choose to keep their accounts active maintaining a small balance. Over the years, they ignore the deposit since the amount is too small to bother withdrawing. This was the case with public sector banks who had low minimum balance requirements for several years.
New generation private banks have lesser amount of unclaimed deposits because they have a high minimum balance requirement. If the minimum balance is not maintained banks debit the account maintenance charge every quarter resulting in the account getting depleted eventually.
Bankers also cite instances where legal heirs are not aware of the accounts owned by their benefactors and have known of it only after the death of the real owner of the accounts. However, the nomination facility and the 'know your customer' norms that banks are applying stringently now could help banks as it helps them get more information about the claimants. RBI should also consider putting names of people on a website to help banks trace claimants, said a banker on condition of anonymity.
In western countries, for instance in Canada, the central bank offers a facility to do an online search for unclaimed deposits and claim them. Unclaimed deposits of over $500 are held indefinitely while lesser amounts are held for 10-20 years at the original bank and another 10 years with the central bank. According to K Unnikrishnan, Deputy Chief Executive of Indian Banks' Association (IBA), a self regulatory body for Indian banks, banks did not make any provisions for interest payments on such accounts earlier.
However, the RBI has now directed banks to internally formulate a policy of interest payable at the time of a claim of such unclaimed deposits. Though they comprise a very small portion of a bank's resources, they earn a float as banks deploy these resources he added.