“Unclaimed Bank Deposits Surge to Rs. 42,270 Crore in Fiscal Year 2023”
In a paradigm shift within the banking landscape, unclaimed deposits in India have witnessed a staggering 28% annual increase, soaring to Rs. 42,270 crore as of March 2023. This revelation, disclosed in data presented to Parliament on Tuesday, marks a significant uptick from the Rs. 32,934 crore recorded in the preceding fiscal year, FY22. The story behind these unclaimed funds unfolds as we navigate through the numbers and the regulatory measures implemented to address this growing concern.
The Escalation: A 28% Yearly Increase
The surge in unclaimed deposits has taken the financial sector by surprise, growing at a rate of 28% year-on-year. As of March 2023, public and private sector banks find themselves holding a substantial sum of Rs. 42,270 crore in unclaimed deposits, reflecting a substantial increase from the previous fiscal year’s Rs. 32,934 crore.
Breakdown of Unclaimed Deposits
Delving deeper, the unclaimed deposits are distributed across public and private sector banks. Public sector banks bear the brunt, holding Rs. 36,185 crore, while their private sector counterparts account for Rs. 6,087 crore in unclaimed deposits. This disparity prompts a closer examination of the contributing factors and potential solutions to mitigate this financial challenge.
Regulatory Measures: RBI’s Depositor Education and Awareness (DEA) Fund
Banks are mandated to transfer unclaimed deposits, lingering in accounts for ten or more years, to the Reserve Bank of India’s (RBI) Depositor Education and Awareness (DEA) Fund. In response to concerns raised in the Rajya Sabha, Minister of State for Finance Bhagwat K Karad stated that the RBI has undertaken several initiatives to reduce unclaimed deposits and facilitate their return to rightful owners.
RBI’s Directive on Displaying Unclaimed Deposits
To enhance transparency, the RBI has directed banks to display lists of unclaimed deposits on their websites. These lists encompass accounts that have remained inactive or inoperative for a decade or more. Furthermore, banks are obligated to locate customers or legal heirs of deceased account holders to facilitate the rightful return of unclaimed deposits.
Policy Framework and Grievance Redressal
In a bid to streamline processes and address customer concerns, the RBI has mandated banks to establish board-approved policies for classifying unclaimed deposits. Additionally, robust grievance redressal mechanisms have been instituted to ensure quick resolution of complaints related to unclaimed deposits. This multifaceted approach aims to create a customer-centric banking environment.
RBI’s Technological Intervention: Unclaimed Deposits Gateway to Access Information (UDGAM)
Recognizing the need for a centralized system, the RBI has introduced the Unclaimed Deposits Gateway to Access Information (UDGAM), a web portal designed to search for unclaimed deposits across multiple banks. This technological intervention streamlines the process of identifying and addressing unclaimed funds.
‘100 Days 100 Pays’ Campaign
In an ambitious move, the RBI launched the ‘100 Days 100 Pays’ campaign. The primary objective is for banks to track and settle the top 100 unclaimed deposits of each bank in every district within a 100-day period. Commencing on June 1, 2023, and concluding on September 8, 2023, this campaign seeks to expedite the return of funds to rightful claimants.
Results and Impact: Major Banks Refund Rs. 1,432.68 Crore
By the conclusion of the ‘100 Days 100 Pays’ campaign, 31 major banks, collectively representing over 90% of unclaimed deposit balances with the DEA Fund, had successfully refunded Rs. 1,432.68 crore. This noteworthy achievement underscores the RBI’s commitment to reducing unclaimed deposits and ensuring that rightful claimants receive their due amounts.
Ongoing Efforts and Future Outlook
The ongoing efforts by the RBI and financial institutions underscore a commitment to increasing transparency and enhancing customer service in the banking sector. The journey to address unclaimed deposits is multifaceted, involving regulatory measures, technological interventions, and proactive campaigns to expedite the return of funds to rightful claimants. As India’s financial landscape evolves, these initiatives play a pivotal role in creating a more accountable and customer-friendly banking environment.
In conclusion, the surge in unclaimed bank deposits in India presents both a challenge and an opportunity for the financial sector. While the numbers are indicative of a growing concern, the regulatory measures and technological interventions implemented by the RBI reflect a proactive approach to address this issue. The ‘100 Days 100 Pays’ campaign serves as a testament to the tangible impact of concerted efforts in reducing unclaimed deposits and ensuring financial institutions uphold their responsibility to customers. As the banking sector continues to evolve, these initiatives pave the way for a more responsive and customer-centric financial ecosystem.