Significant Increase in Unclaimed Bank Deposits Data from the Reserve Bank of India (RBI) indicates that unclaimed deposits in Indian banks have surged, reaching Rs 42,270 crore as of March 2023. This represents a significant increase from Rs 39,900 crore in December 2022, more than doubling since December 2019. The rise is attributed to the impacts of the COVID-19 pandemic, which exacerbated the challenges in managing bank accounts.
Distribution of Unclaimed Deposits
- Public Sector Banks (PSBs): Dominating the share with Rs 33,303 crore, about 83% of the total unclaimed deposits as of December 2022. The State Bank of India (SBI) holds the largest amount, with Rs 8,069 crore across 2.16 crore accounts.
- Private Sector Banks: ICICI Bank leads with unclaimed deposits totaling Rs 1,074 crore in 31.8 lakh accounts, followed by HDFC Bank with Rs 447 crore.
- Foreign Banks: DBS Bank witnessed a substantial increase in unclaimed deposits, from Rs 0.5 crore in 2019 to Rs 94 crore in 2022.
Understanding Unclaimed Deposits Funds in accounts that have been inactive for 10 years or term deposits not claimed within this period are classified as unclaimed. Such funds are transferred to the Depositor Education and Awareness (DEA) Fund managed by the RBI but remain claimable by depositors with accrued interest.
Reasons Behind the Increase
- Many accounts have been abandoned or forgotten due to migration or the owners’ death during the pandemic, with no proper nominations in place.
- Complex documentation processes for legal heirs to claim these deposits further contribute to the rise in unclaimed funds.
RBI’s Initiatives to Mitigate Unclaimed Deposits
- UDGAM Portal: Launched by the RBI, this online platform allows for centralized searching of unclaimed deposits, with 30 banks participating as of March 2024.
- Proactive Measures: RBI mandates banks to periodically review large unclaimed deposits and proactively contact customers.
- Technological Solutions: Implementation of the Account Aggregator system is advised to help reduce the volume of unclaimed funds by enhancing transparency and accessibility of financial information.
Related Banking Developments
- RBI has updated the eligibility criteria for Urban Co-operative Banks (UCBs) to be included in the Second Schedule of the RBI Act, 1934.
- Despite an increase in the installation of micro ATMs across India in 2022, there has been no significant change in the volume of transactions processed through these devices since June 2022.
The increasing trend of unclaimed deposits highlights the need for enhanced customer engagement and innovative banking solutions to manage and reclaim dormant financial resources effectively.
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