Several public sector banks in India have transferred a total of Rs 35,012 crore ($4.7 billion) in unclaimed deposits to the Reserve Bank of India (RBI). The move comes as part of an effort to reduce the amount of unclaimed funds held by banks and ensure that the money is put to productive use.
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What are Unclaimed deposits:
Unclaimed deposits are those that have been lying dormant in bank accounts for a period of 10 years or more. Banks are required to make efforts to locate the account holders or their legal heirs and transfer the funds to them. However, in cases where the account holders or their heirs cannot be traced, the funds are transferred to the RBI’s Depositor Education and Awareness Fund (DEAF).
Objective of this transfer:
The transfer of unclaimed deposits to the DEAF is aimed at promoting financial literacy and awareness among depositors. The fund is used to finance various activities related to educating depositors on the benefits and risks associated with banking and financial products.
Which bank transfers the most:
The banks that have transferred the unclaimed deposits to the RBI include State Bank of India, Punjab National Bank, Bank of Baroda, Union Bank of India, and Canara Bank, among others. The largest transfer was made by State Bank of India, which transferred Rs 13,274 crore ($1.8 billion) to the DEAF.
Need of this approach:
The RBI has welcomed the move by the banks and has urged other banks to follow suit. The central bank has stated that the transfer of unclaimed deposits to the DEAF is an important step in ensuring that the funds are put to productive use and that depositors are made aware of the benefits of banking and financial products.
In conclusion, the transfer of unclaimed deposits by public sector banks to the RBI’s DEAF is a positive step towards promoting financial literacy and ensuring that unclaimed funds are put to productive use. The move will also help to reduce the burden on banks of holding large amounts of unclaimed deposits and will encourage depositors to be more proactive in managing their finances.
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