RBI’s Measures to Tackle Growing Unclaimed Deposits

The Reserve Bank of India (RBI) has taken significant steps to address the rising issue of unclaimed deposits, safeguarding depositor interests while introducing efficient mechanisms for reclaiming funds. Unclaimed deposits, defined as balances in savings/current accounts or term deposits inactive for over 10 years, have seen a sharp rise in recent years.

Growth of Unclaimed Deposits

Definition: Unclaimed deposits include accounts or term deposits untouched for over 10 years.

Contributors: Inactivity in accounts, unclaimed fixed deposits, and unclaimed funds after the death of account holders contribute to this issue.

Statistical Surge

• The Depositor Education and Awareness (DEA) Fund grew 26%, rising from ₹62,224.89 crore in 2022-23 to ₹78,212.53 crore in 2023-24.
• Savings accounts account for 73% of all unclaimed deposits (2018-2022 data).

Key RBI Initiatives to Address the Issue

100 Days 100 Pays Campaign (May 2023): This initiative expedites the settlement of unclaimed deposits, targeting the top 100 unclaimed deposits in each district. The campaign has been extended to April 1, 2024.

UDGAM Portal (August 2023)

• Allows individuals to search for unclaimed deposits across multiple banks.
• Users can search using the account holder’s name and bank details.

Website Publication: Banks must publish lists of unclaimed deposits on their websites, displaying names and addresses (excluding sensitive account details).

New Rules for Inactive Accounts

Annual Review: From January 2024, banks are required to annually review accounts for inactivity.

Communication: Account holders must be notified through various methods about their account’s status.

Banking Laws (Amendment) Bill, 2024

• Permits up to four nominees for deposits and lockers.
• Establishes clear hierarchies for prioritizing nominees.
• Encourages simplification of reactivation and nomination processes to reduce inactive accounts.

Future Directions

• Banks, including SBI, have suggested that accounts linked to government payments remain active through minimal non-financial transactions.
• The RBI is promoting digital platforms to update customer details, ensuring better account activity monitoring.

Summary of the news

Why in News	Key Points
RBI Tackles Unclaimed Deposits	Measures to resolve unclaimed deposits from inactive accounts and unclaimed term deposits.
UDGAM Portal Launched	Launched in August 2023 to allow users to search unclaimed deposits across multiple banks.
DEA Fund Growth	Depositor Education and Awareness (DEA) Fund grew by 26% from ₹62,224.89 crore in 2022-23 to ₹78,212.53 crore in 2023-24.
100 Days 100 Pays Campaign	Launched in May 2023, extended to April 1, 2024, to settle the top 100 unclaimed deposits in each district.
New Regulations on Inactive Accounts	From January 2024, banks must review accounts annually and notify account holders about inactivity.
Banking Laws (Amendment) Bill, 2024	Allows up to four nominees for bank deposits and locker items, establishes a hierarchy for nominations.
State Bank of India (SBI) Proposal	Suggested that non-financial activities, like government payments, should keep accounts active.