Unclaimed Deposits Over ₹78,000 Crore: Easier Process to Claim Funds Starting April 1

As of March 2024, unclaimed deposits across Indian banks have amassed a staggering ₹78,213 crore, marking a 26% increase from the previous year. These funds, which have remained inactive for several years, belong to account holders or their nominees who have either forgotten or been unable to access them. To address this issue, banks are likely to implement a simplified process to make it easier for individuals to reclaim their funds.

RBI Guidelines and Simplified Process

According to a news report, from April 1, 2024, banks across the country will adopt new guidelines issued by the Reserve Bank of India (RBI) for unclaimed deposits and inactive accounts. The new process aims to standardise the reclamation of funds and improve transparency. The most notable change is the requirement for banks to display details of unclaimed deposits on their websites, which include key account holder information and provide a public search feature for easy access.

The new format would involve a streamlined application and declaration process. This will include a set of standardised documents required for deposit reclamation, ensuring that account holders or their nominees can quickly and efficiently submit claims.

How Will the Process Work?

Under the new process, account holders or nominees will need to provide basic personal information, such as their name, mobile number, and address. With this information, the respective bank branch will verify the details and process the application for the unclaimed deposits. This development is designed to simplify the existing system, which currently requires customers to check unclaimed deposits via the RBI’s UDGAM portal and then visit their bank branch to claim the funds.

As per a news report, the new process will be fully operational by FY26, when an online mechanism will be implemented for even easier retrieval of unclaimed funds.

Working Group and Standardised Formats

A working group was established last year, comprising senior bankers from state-run institutions, after consultations with the RBI, government officials, and other stakeholders. This group’s purpose was to propose methods for expediting the settlement of unclaimed funds. The standardised process, which has been developed by public sector banks, will also be made available to private sector banks through the Indian Banks’ Association.

Impact of the Banking Laws (Amendment) Bill, 2024

The recent Banking Laws (Amendment) Bill, 2024, introduced in August, has further simplified the process for reclaiming unclaimed funds by allowing up to four nominees per bank account. This is a significant increase from the previous limit of just one nominee. This amendment aims to ensure that more people are able to access funds in the event of an account holder’s death.

Government and RBI Initiatives

In addition to the new banking guidelines, Finance Minister Nirmala Sitharaman has directed financial regulators to initiate a special drive to settle unclaimed deposits. This drive will extend across various sectors, including banks, shares, dividends, mutual funds, and insurance. The initiative reflects the government’s commitment to addressing the issue of unclaimed funds, benefiting millions of account holders and nominees.

Conclusion

The new guidelines and streamlined process for unclaimed deposits offer a positive step forward in ensuring that account holders and their nominees can easily access funds that have long been dormant. With improved transparency, simplified procedures, and the introduction of a more efficient online retrieval mechanism, individuals will soon have a more straightforward way to recover their unclaimed deposits.

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