Rashmi
India has a hidden wealth of unclaimed deposits worth billions of rupees lying dormant in banks and financial institutions. Many people, due to various reasons, forget about their old bank accounts, investments, shares, and dividends, which ultimately become unclaimed deposits after 10 years of inactivity. According to recent data, there are more than 10.24 crore unclaimed deposits in India, amounting to approximately Rs. 35,000 crore, as of February 2023. This number is expected to increase with every passing year, as more people forget about their old accounts and investments.
Unclaimed Deposits in India
Unclaimed deposits refer to any bank account, investment, share, or dividend that has been inactive for ten years or longer. In India, unclaimed deposits are not limited to small amounts of money lying in savings accounts. They are also prevalent across various financial sector segments, including banking deposits, shares and dividends, mutual funds, and insurance. There are several reasons why people forget about their accounts and investments, such as relocation, changing jobs, or even death.
Banking Deposits
Banking deposits are the most common form of unclaimed deposits in India. When people change jobs or relocate, they often open new bank accounts and stop using the old ones, forgetting about the money they left behind. Banks typically send several reminders to customers with inactive accounts to reactivate them or transfer the money to another account. However, if the customer does not respond, the account becomes dormant, and after ten years, the money is transferred to the RBI's Depositors Education and Awareness Fund.
Shares and Dividends
Unclaimed dividends and shares are also prevalent in India. Many people invest in the stock market but forget about their investments, dividends, or even their stocks altogether.However, it is difficult for investors to get access to their unclaimed dividends and shares due to the lack of proper mechanisms.
Mutual Funds and Insurance
People also forget about their mutual fund investments and insurance policies. When policyholders or investors stop paying their premiums or investing in their funds, the policies or funds become inactive. If they remain inactive for ten years, the money is transferred to the RBI's Depositors Education and Awareness Fund.
Challenges in Reclaiming Unclaimed Deposits
Despite the government's efforts to locate and return unclaimed deposits to their rightful owners, there are several challenges in the process. One of the most significant challenges is the lack of awareness among people about their dormant accounts and investments. Many people do not keep track of their accounts and investments and forget about them over time.
Another challenge is the lack of a centralized system for locating and reclaiming unclaimed deposits. Currently, people have to visit multiple bank websites or contact various financial institutions to search for their dormant accounts and investments, which can be time-consuming and frustrating.
Moreover, the process of reclaiming unclaimed deposits is often complicated and involves several legal and procedural formalities. In many cases, people have to provide proof of identity and ownership, which can be difficult if they do not have the necessary documents.
Government Initiatives
The Indian government has taken several initiatives to address the issue of unclaimed deposits. In January 2023, the RBI announced the development of a new centralised web portal to search for unclaimed deposits that are older than ten years. The new portal will enable bank customers to find their unclaimed deposits at a single point, rather than having to visit multiple websites.
Additionally, Finance Minister Nirmala Sitharaman recently asking regulators to initiate a special drive to settle unclaimed deposits in banks and financial institutions. The Reserve Bank of India has also announced the development of a new centralized web portal to search for unclaimed deposits that are older than 10 years. This new web portal will help bank customers to find their unclaimed deposits at a single point.
The Supreme Court has also taken notice of the issue, with a recent PIL seeking a mechanism to inform the legal heirs of deceased depositors about the unclaimed deposits lying dormant in bank accounts. The PIL has sought directions to the Centre and others to ensure that unclaimed deposits of the public that get transferred to government-owned funds be given to the legal heirs of the depositors. It said a mechanism needed to be evolved to inform the legal heirs about the unclaimed deposits lying in dormant bank accounts.
In conclusion, the issue of unclaimed deposits in India is a growing concern that has serious implications for financial institutions and individual savers alike. While the government and regulators are taking steps to address this issue, it is also important for individuals to be aware of their own financial accounts and assets and to take steps to ensure that they do not become unclaimed deposits. This can include regularly reviewing and consolidating financial accounts, keeping family members informed about investments and savings, and ensuring that all necessary documentation is up to date. By taking these steps, individuals can help to ensure that their hard-earned savings are not lost to the black hole of unclaimed deposits.
The author is a Chartered Accountant with 2 decades of experience into Accounting, Taxation, Auditing, Risk & Compliance, Credit Controls, Due diligence. Currently, the author is the founder and managing partner at RRL Global services.
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