Any guesses what do the numbers 47 million and Rs 14,307 crore stand for? They are the number of accounts with banks which have unclaimed deposits. In other words, this is the amount idle lying in Indian banks, and they do not include regional rural banks, according to the Reserve Bank of India’s data released last week. Says Ranjit Dani, Nagpur based Certified Financial Planner (CFP), “There are a couple of reasons for such dormant or inoperative accounts. One is a change of job, with every new job, you get a new bank account. But, the older one is not closed, but left unused, at times even forgotten for years together. Second, when people had passed away but failed to inform family members of their accounts when they were alive.” If you haven’t done any transactions in your account for more than 12 months, then it will become an inactive account. And if you don’t do any transactions from a bank account for 24 months, then it will be classified as dormant. As per RBI guidelines, there is no difference between dormant accounts and inoperative accounts.
These dormant/ inoperative accounts come with their own set of issues; in fact, there is even certain kind of risks attached to such accounts. Firstly, money in an unused account would earn four per – lower than the consumer price index of 5.54 per cent in November. If invested in Public Provident Fund account, the returns would have been 8.65 per cent. Dani says, “Such accounts can be an easy target for dishonest bank employees for siphoning and embezzlement of funds. These can also be used for money laundering actives.” Lastly, banks charge Rs. 250-750 a year to maintain inactive accounts. Mostly they adjust it from accrued interest. Plus, you might have to pay the penalty, in case you don’t keep a minimum balance.
How to get unclaimed money: The Reserve Bank of India has mandated banks to publish a list of inactive or inoperative accounts for ten years or more on the bank’s website. Adhil Shetty, CEO Bankbazaar.com says, “The first step is to check the inactive account details. If you are the account holder yourself, you would need to submit the unclaimed deposits claim form along with a valid identity and address proof document. If you are the legal heir, you will need to submit the death certificate along with the unclaimed deposits claim form and identity and address proof. Note that you will need to provide the originals to the bank for scrutiny.” The bank will review the claim, and once approved; it will follow the usual claim settlement process.
If you don’t claim: If these are not claimed for ten years or more, then this money would be transferred to the Depositor Education and Awareness Fund (DEAF) according to an RBI mandate.
Shetty says, “Nevertheless, account holders can still claim the money even after it has been transferred to DEAF. The total amount payable will include the unclaimed amount plus the accumulated interest paid by that specific bank. The money would continue to earn interest.” For Fixed Deposits (FDs), the maturity proceeds of unclaimed FDs will earn the savings account rate of interest starting from the date of maturity. Keep in mind that the interest on savings bank accounts
is credited irrespective of whether the bank account is operative or dormant.
Ideally, you should have not more than two accounts, apart from the salary account. These will be your primary accounts. Dani says, “As soon as salary hits your salary account transfer funds into two other savings accounts, one for expenses and the other which will work as an investing account.” Make all your expenses from the former and all investments from the latter. Dani says, “That way you will be able to consolidate all your financial data systematically.