Every year crores of bank deposits all over the world go unclaimed due to several reasons. According to the Reserve bank of India, the unclaimed accounts still prevail with over Rs. 64,000 crores in them. This can happen due to various reasons. Here we will study all about unclaimed bank deposits. If a person does not inform his family and close relatives, then in the case of any untoward incident the family may not be aware of any accounts of the deceased.
Sometimes due to the possession of many accounts, people may lose track. As individuals change places and jobs, they forget about their investments and savings. Misplacing the bank documents also makes it difficult to claim the deposits. Investors have been investing in various schemes offered by financial companies. But over the years, due to long tenures, they may tend to forget about the investments and savings made by them. Once declared unclaimed, these deposits are transferred to different funds. But the investors and account holders are still allowed to claim these deposits.
Through this article, I would like to elaborate on unclaimed bank deposits. Let’s find out where exactly the unclaimed amount goes. Then let’s look into what the financial institutions in India do to the unclaimed money. How to search and reclaim these accounts. Who can reclaim these accounts? How to avoid the deposits and accounts from getting unclaimed? What are the most recent guidelines released by the Reserve Bank of India? And finally, answer some frequently asked questions.
Unclaimed Bank Deposits
According to the Reserve Bank of India, a bank deposit is called unclaimed when the account holder fails to make a transaction for more than 10 years. Or if the maturity amount hasn’t been claimed or renewed after over 10 years for a term deposit. The same applies to unclaimed bank accounts as well.
The banks have to contact the account holders for inquiry. But if they cannot do so, such deposits and accounts are transferred to the head bank from its branch. The reclamation of such deposits is possible by submitting the official documents. Unclaimed deposits differ from dormant accounts. The account is dormant when the account is not operated for 2 years.
How To Reclaim The Unclaimed Bank Deposits?
The procedure to reclaim the unclaimed bank deposits and accounts is not difficult. The government has been making several attempts towards finding the legal owners. So, it mandatory for the banks to display the list of the primary account holders’ names and addresses.
This is posted on their official bank website. The account holders have to download the form from the official bank website. This form should be duly filled. It should be submitted to the bank along with the necessary documents prescribed by the bank.
To reclaim the amount in savings fixed deposit, the account holder has to submit either this bank account number or the fixed deposit receipt or his passbook. KYC (Know Your Customer) documents like photo identity are also required. If the children of the account holder wish to reclaim, then they have to get the proof of being the heir.
2. Mutual Funds
The folio number of mutual funds is important. Hence when reclaiming the folio, no. should be necessarily submitted to the company. If the nominee wishes to reclaim, then he has to submit the nomination form.
3. Post Office
When reclaiming the post office account, the passbook or the post office certificate should be submitted along with the KYC documents. The claim should be made in the post office, where the account was first opened.
The submission of policy bond and the bank account details to the life insurance companies is necessary. The money can be claimed by the investor himself or his nominees. Once the bank approves the claim, the money is transferred through various electronic modes.
5. Provident Fund
The Aadhar card should be linked to the EPF account. Then the reclamation procedure can be completed online. If not, then the EPF transfer form has to be submitted to reclaim a provident fund. Three copies of the EPF form have to be submitted. One to the present employer, the other to the EPF commissioner, and the third to the old employer. Nominees can also reclaim the amount provided they have proper documentation.
6. Stocks And Bonds
The share transfer agent has to be contacted. To reclaim the amount, the folio number, the bank details, and the KYC documents are needed for submission.
7. Income Tax Refunds
The Centralized Processing Center or the Public Relations Officer should be contacted for online and offline reclaiming of the returns.
Who Can Reclaim The Unclaimed Bank Deposits And Account?
i. The Claimant Can Be The Account Holder Or The Investor Himself
The account holder himself can approach the bank to claim his deposits. This can happen if the account holder is alive. But he had forgotten about the bank deposit or had misplaced his documents. When claiming his account, he will have to submit a form and the bank’s relevant documents.
ii. The Claimant Can Be A Nominee Or The Legal Heir To The Account Holder
In this case, the nominee or the heir to the account holder will have to submit the deceased account holder’s death certificate. Further, the legal heir has to proclaim the proof of being the legal heir of the deceased account holder. The nominee will have to submit the nomination form to prove his claim over the bank deposit. These documents should be accompanied by the passbook or term deposits receipts.
iii. The Claimant Can Be A Non-Individual
These could be companies, organizations, institutions, or non-profit groups wherein authorized personnel is permitted to operate the account. Then the form should be submitted on behalf of the company. The claim form has to be duly signed by the authorities along with address proofs. Documents should be accompanied with the claim form.
After the submission of all the relevant documents, the bank verifies the claims and, after a thorough examination of the genuineness of the bank, will approve the claim.
How To Search For Unclaimed Bank Deposits?
The banks have to update their website according to the RBI guidelines. The name and address of the primary account holders are available on these websites. Banks have to find out their customers’ whereabouts, the nominees, and their legal heirs. They have to review all the accounts annually. If a person hasn’t claimed any of his account or bank deposits, then he has to track it. The account holders have to check out the bank website if they haven’t claimed any of their deposits before.
The claimants can search for the unclaimed bank deposits based on:
i. Name and date of birth.
ii. Name and PAN.
iii. Name and passport number.
iv. Name and pin code.
v. Name and telephone number.
To search for unclaimed insurances, the policyholders need to enter the following details:
vi. Policy number.
vii. PAN of the policyholder.
viii. Name of the policyholder.
ix. Date of birth of the policyholder.
In this case, the DOB and name of the policyholder are necessary. The policy number and PAN are not necessary for submission.
Sometimes the banks may miss out on some names while updating the list. In this case, the claimants have the full right to approach the bank authorities. They can verify the claim by procuring the documentary proof of account statements. The bank may further proceed with its verification of the claimant to reclaim the unclaimed bank account.
The unclaimed account can be googled. The keywords ‘inoperative bank account list of (bank name)’ should be entered. This will lead to the official bank website with the list of inoperative bank accounts. Enter the details required to get more information about the accounts.
What Happens To The Unclaimed Money?
After 10 years of inactivity, once the amount is not claimed, the banks calculate the balance in all the unclaimed and transfer it to any of the following funds as per the Reserve Bank of India. The unclaimed amount continues to earn interest at the rate, as stated by RBI.
1. Depositor Education Awareness Fund (DEAF).
Depositor Education Awareness Fund Scheme an initiative by the Reserve Bank of India. It started in the year 2014. The bank fixed deposits, savings bank accounts, term deposits, and Electronic Transfer Fund (ETF) that are inactive for 10 years are transferred to these funds upon 3 months from the expiry of 10 years. These funds are supporting the depositors’ interest. The account holders or the nominees can reclaim the deposits from these funds. These can be claimed even after 10 years of inactivity. The deposits in this fund earn an interest rate of 3.5% p.a with effect from July 2018.
2. Senior Citizens Welfare Fund (SCWF).
The unclaimed deposits from the provident fund, post office savings account, and other similar accounts are transferred to the Senior Citizens Welfare Fund. This fund started in the year 2015. It enabled the efficient use of unclaimed deposits for the betterment of society. Before transferring the amount to the SCWF, the bank owners or the financial companies put in efforts to contact the account holder or the nominees after the maturity or the end of the tenure. According to Section 126 of the Financial Act, 2015, if no one claims the deposits in the SCWF, then these are transferred to the Central Government after 25 years.
3. Investor Education and Protection Fund (IEPF).
The unclaimed money from the mutual funds and stocks are transferred to these funds. After 7 years, the unclaimed dividend and the unpaid money from the stock market are transferred to these funds. The Investor Education and Protection Fund have its website that keeps the investors aware of their interests. Investors can visit the official portal www.iepf.gov.in to determine if they have any unclaimed money in these funds.
What Happens To The Unclaimed Money In Different Financial Institutions?
- The money in the Bank Fixed Deposits earns an interest rate of the bank savings. Once mature, if the account holder withdraws without the proper documents and proofs, then he is liable to receive only the interest rate from the date of maturity. Otherwise, if the matured deposit upon getting reinvested, may get the applicable fixed deposit interest rates.
- The interest in every savings bank account is credited periodically. If the account is unclaimed, then these credits won’t stop. Instead, the unclaimed account will earn interest as long as it is not withdrawn.
- The Depositor Education and Awareness Fund Scheme (DEAF) contains all the unclaimed bank deposits.
2. Mutual Funds
- The dividends in mutual funds are issued regularly. These dividends are communicated to the unitholders through posts or emails. In case of any change in residential or email address, the details may not be communicated to the investors.
- After three months of unclaimed dividends, these are invested in the money markets.
- The unclaimed returns are transferred to the Investor Education and Protection Fund (IEPF) after three years of reinvestment in the stock market.
- The share earnings, matured deposits, debentures, refundable application money, and interest of the investor is also transferred to the IEPF.
- The unitholders may be charged up to 0.5% on the dividends upon reclaiming the investments.
3. Post Office
Every year many people invest in the small saving schemes. This money remains unclaimed mostly due to its non-withdrawal after attainting maturity. The unclaimed deposits after 10 years of inactivity are transferred to the SCWF. Here it will continue to earn the savings interest rate. This interest will be earned only for 2 years.
The death claims, maturity claims, indemnity claims, premium refunds, and survival benefits that are not claimed by the family members of the deceased are included in this unclaimed amount. These deposits in insurance result in the investigation by the insurance companies. Hence it is advised that the family members or the relatives proclaim these insurance amounts at the earliest by these companies. This sector’s unclaimed amount is transferred to the Senior Citizen Welfare Fund (SCWF) after 10 years of inactivity.
5. Provident Fund
The Employees’ Provident Fund has over crores of rupees in the unclaimed EPF accounts. After 3 years of a person’s retirement, these accounts become inactive provided he is at least 55 years old. The main reason behind the crores of unclaimed deposits in the Employee’ Provident Fund Organization (EPFO) is the account holders’ discontinuation years ago. But these deposits continue to earn interest at the rate stated by the RBI.
When the owners come to claim their amount, their identification is difficult. The Aadhar card is necessarily linked to the universal account number to ease the identification process. Apart from the account holder, the pension money can also be claimed by the nominees and the legal heirs. These deposits are transferred to the Senior Citizen Welfare Fund (SCWF) if they are not active for 10 years. Once transferred to the SCWF, if no claim has been made for 25 years, this amount is transferred to the central government as per Section 126 of the Financial Act 2015.
6. Stocks and Bonds
The companies regularly issue dividend warrants. The dividends are transferred to the Investor Education and Protection Fund (IEPF) if they are unclaimed within 7 years.
7. Income Tax Refunds
In this case, there is no interest earned on the unclaimed amount.
Unclaimed money the different financial institutions.
How To Avoid The Inactivation Of The Bank Deposits?
There are several ways an individual can adopt to keep track of their bank deposits and investments.
- Inform a family member or close relatives about every investment and bank account.
- Keep the financial institutions updated about your contact details.
- Nominate at least one family member to every investment you make. Keep him aware of the nomination and the reclaim procedure.
- Try and invest online, if possible.
- Track every investment you make.
- Maintain a folder or an excel sheet with all the necessary details.
Role Of Banks In Finding The Claimant
Banks should play a proactive role in finding the claimants of the respective unclaimed accounts. They should find out the whereabouts of the account holders. So, they need to follow the instructions as stated below when dealing with inactive accounts.
i. Banks should review the account every year. They should inform the account holders in writing inquiring about the reasons for inactivity. If the customers have shifted, then they should provide the details of the new bank account. So that the current account can be transferred there.
ii. If the postal letters are repeatedly undelivered, then the bank should start inquiring about the whereabouts of the customers.
iii. If the customers are not traceable through address, then the banks should consider calling them via telephone or contact the person who had introduced the account holder or any other individuals who are related to the customers.
iv. If the customer replies to the bank, stating his reasons for inactivity, then the account should be treated as active for one year. During this time, if the account holder fails to operate the account, then it should be classified as inoperative.
v. The customers should not be charged upon the activation of the bank account.
vi. The interest on a savings bank account should be credited whether the account is active or not.
vii. To classify the account as inoperative, both the credit as well as debit transactions should be taken into consideration.
RBIs Guidelines On Unclaimed Bank Deposits And Accounts
- The banks are notified to update their websites with a list of unclaimed bank deposits and accounts that have been inactive for the past 10 years.
- The list displayed on the websites should contain only the names and the addresses of the primary account holders.
- The account number and the branch details should not be mentioned on the website.
- If the account does not belong to an individual, then the authorized person’s name should be mentioned on the website.
- There should be a search/find button for the general public to search their accounts on the list.
- The banks have to update their websites periodically.
- The procedure to reclaim and the documents needed to claim the deposits should be mentioned on the website.
1. What are unclaimed bank deposits?
2. Is there any risk posed by unclaimed bank deposits?
3. How to track the existence of any unclaimed bank deposit?
4. What is a DEAF account?
5. What is the difference between a dormant account and an unclaimed account?
6. Are unclaimed bank deposits liable for tax?
7. Will the bank account be closed if it is not operated for the last 10 years?
8. What will happen when the account holder transfers money to an unclaimed account?
The number of unclaimed bank deposits and accounts in the Indian banking sector is on the rise. The Reserve Bank of India has been constantly making efforts to find the claimants. The account holders have to ensure that they claim their deposits on time. Many times, due to the sudden death of the account holders, the nominees and the heirs of the account holder may not be aware or must have forgotten about the deposits and investments made by the deceased person. In such cases, the claimant should be keeping a check in the bank websites for any unclaimed deposits. With the huge lump-sum in the accounts left unclaimed, they are depriving themselves of the riches that they have in their accounts. Hence, one should make sure that there isn’t any unclaimed account in his/her name or any of your relatives. If there is any, then make sure to claim the deposit by following the guidelines as stated by the bank.
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