Unclaimed bank accounts in India have been increasing steadily over the years.  Unclaimed deposits in public and private sector banks in financial year 2022 stood at ₹32,934 crore, but at the end of financial year 2023 they saw a 28% jump to ₹42,272 crore.  The onus to protect one’s assets lies primarily with the individual holding the account.  Once an asset gets tagged as “unclaimed”, the process of reclaiming it may be long, tedious and expensive.

What does RBI say?

The Reserve Bank of India (RBI) issued a press release on 22nd July 2022, highlighting the issue of unclaimed deposits with banks.  See the press release extract below.

Balances in savings/current accounts which are not operated for 10 years, or term deposits not claimed within 10 years from date of maturity are classified as “Unclaimed Deposits”. These amounts are transferred by banks to “Depositor Education and Awareness” (DEA) Fund maintained by the Reserve Bank of India. The depositors are, however, still entitled to claim the deposits at a later date from the bank(s) where such deposits were held along with interest, as applicable. However, despite public awareness campaigns undertaken by banks as well as RBI from time to time, the amount of Unclaimed Deposit is showing an increasing trend.

The growing volume of Unclaimed Deposits arise mainly due to non-closure of savings/current accounts which depositors do not intend to operate anymore or due to not submitting redemption claims with banks for matured fixed deposits. There are also cases of accounts belonging to deceased depositors, where the nominees/ legal heirs do not come forward to make a claim on the bank(s) concerned. To help such depositors or the nominees/legal heirs of deceased depositors identify and claim the deposits, banks already host the list of Unclaimed Deposits on their website with some identifiable details. Members of public are encouraged to identify and approach the bank concerned for claiming such deposits.

Forgetting your assets, seriously?

In the financial year 2023, public sector banks held a major chunk of unclaimed bank deposits, approximately ₹36,185 crore, while private sector banks had a much smaller amount of ₹6,087 crore only.  Is this because the customer base of the latter is more educated and aware?  Maybe so, but unclaimed deposits in some of the most developed countries, like the UK, also keep rising. 

Or, is it that we keep most of our funds in private banks to avail their elaborate buffet of products and services, and the banks proactively engage with their customers on a regular basis, thereby acting as reminders for us?  Nobody can be sure because such “engagements” operate at a personal level, evoking different behaviour and reaction in each of us.

Another possibility is limited “brand recall” of secondary funds or deposits locked in for the long term.  There are people with multiple accounts or deposits in the same or different banks.  The “primary” account which they operate frequently gets maximum attention, but not the others.  One may have a fund sitting in a public sector bank for higher returns (like PPF), but it is an account one operates perhaps once a year.  During this time, one may be busy, travelling, going overseas on projects or may even relocate to another country.  In the financial and IT industry, this is quite common.

Most importantly, managing an asset is often more challenging than earning it.  The overhead of maintaining documents, sharing with your family or nominee and keeping all information up-to-date is not everyone’s cup of tea.  Some people try to keep files or spreadsheets but these too need to be updated regularly.  For the majority, most of their asset information and supporting documents lie in a mail box, submerged under thousands of emails, which we do not even open until needed.  Procrastination and laziness are human traits across generations and societies around the world.

Who is bothered?

The RBI plays a regulatory role in overseeing the process of managing unclaimed funds, and banks are required to adhere to the guidelines provided by it.  Banks are obligated to make efforts to locate the account holders.  This can include sending notifications through registered mail, email, or SMS to the last known contact details.  However, this can help only if we keep the contact information updated from time to time, including nominee details.

It is essential to note that the specific rules and procedures regarding unclaimed bank accounts may vary among banks and are subject to updates by regulatory authorities. Individuals concerned about unclaimed funds should contact their respective banks for the most accurate and up-to-date information.

At the end of the day, it is up to each of us to manage and track our bank assets.  Prevention is better than cure, so our efforts should be to prevent an asset going dormant at all. 

The first step is to share asset information within family at all times because if you are the only person knowing, you could become the “single point of failure” in case you are “down, out or off”.  Having a nominee or even a legal will may not help if your family is not aware that an asset exists.  On the other hand, if they know in advance, chances are your asset will not go dormant or unclaimed, and if it does, it can be reclaimed from the bank or through RBI’s UDGAM portal since information is available with others in the family.