The latest data from the RBI indicates that the amount in ‘Unclaimed Deposits’ by the end of 2020 increased to Rs. 24,356 crores. This is three times the amount by the end of 2014 and more than five times the amount by the end of 2011.
As per Reserve Bank of India (RBI) guidelines, a bank account is considered inoperative/dormant if there are no transactions for over two years. Further, the accounts that are not operative for more than 10 years are classified as unclaimed deposits.
There are multiple reasons for accounts becoming inoperative, with the major ones being – the death of the account holder, shifting to a new place, etc. The RBI has issued guidelines, on how the banks need to deal with inoperative accounts.
As per an update provided in Lok Sabha in August 2021, there are more than 8.13 crore accounts with unclaimed deposits as of 31 December 2020, with the total amount in these accounts at Rs. 24,356 crores. In this story, we analyse the trends in unclaimed deposits based on the information released by the RBI regularly & data provided in the parliament.
Amount in ‘Unclaimed Deposits’ increased by more than five times during 2011 & 2020
In 2011, the amount in unclaimed deposits in all the Scheduled Commercial Banks (SCBs) in India was Rs. 4.38 thousand crores, which increased by more than five-time to Rs. 24.35 thousand crores by the end of 2020.
This growth in amount is more prominent over the last three years. In 2017, the amount in unclaimed deposits was Rs. 11.32 thousand crores, which increased by nearly 26.6% in 2018 to Rs.14.3 thousand crores. In the next year i.e., in 2019, the growth in the amount was 28.4% and in 2020, it increased by 32.5% to Rs. 24.35 thousand crores.
The number of accounts with unclaimed deposits has increased four-fold during 2011-2020. In 2011, the number of such accounts was 1.97 crores. By 31 December 2020, the number of accounts with unclaimed deposits was 8.13 crores across all the SCBs in the country. The growth of such accounts was more prominent over the recent three-year period of 2018 & 2020.
Most of the increase in ‘Unclaimed deposits’ is in Public Sector Banks
Among the different categories of Banks, the data for which is provided in the RBI’s DBIE database, the three major categories of banks with a substantial amount in unclaimed deposits are – Public Sector Banks, Private sector Banks & Foreign banks.
Public Sector Banks (PSBs): A major portion of the unclaimed deposits belong to Public Sector banks. In 2019, the total amount in unclaimed deposits with Public Sector banks amounted to Rs. 14.97 thousand crores. In 2005, it was around Rs. 835 Crores. While there has been a year-on-year increase in the number of unclaimed deposits, major growth was seen in recent years.
In 2015, the amount in unclaimed deposits of PSBs was Rs. 5.78 thousand crores, which increased sharply to Rs. 9.19 thousand crores in 2016. Another sharp increase was witnessed in 2019 when the amount in unclaimed deposits increased from Rs. 11.9 crores by the end of 2018 to Rs.1 4.97 crores by end of 2019. The number of accounts with unclaimed deposits in PSBs by the end of 2019 was 5.35 crores.
Private Sector Banks: The amount in unclaimed deposits in Private Sector banks increased from Rs. 52.73 crores in 2005 to Rs. 2.47 thousand crores at end of 2019. As seen in the case of public sector banks, the growth of amount in unclaimed deposits was more prominent in recent years.
By the end of 2017, the amount in unclaimed deposits increased to Rs.1.5 thousand crores from Rs. 1.17 thousand crores by the end of 2016. This further increased to Rs. 1.97 thousand and Rs. 2.47 thousand crores by the end of 2018 & 2019 respectively.
There has been a consistent year-on-year increase in the amount in unclaimed deposits with private banks except for 2014 when the amount in unclaimed deposits fell from Rs. 624 crores to Rs. 531 crores, which was contributed by the fall of unclaimed deposits in IDBI bank. The number of accounts with unclaimed deposits in private sector banks was 70.9 lakhs by the end of 2019.
Foreign Banks: A total amount of Rs. 455 crores in unclaimed accounts were in the accounts with foreign banks by the end of 2019. There is a steady growth in the number of unclaimed deposits with foreign banks. In 2013, there has been a major increase from Rs. 73 crores to Rs. 491 crores, which fell back to Rs. 148 crores by the end of 2014. This is mainly due to the increase and subsequent fall in the number of unclaimed deposits with Citi Bank during these years.
Nationalized banks account for around 67% of the total unclaimed deposits as of 2020.
As per the data available with RBI and the updates provided in Lok Sabha, a major portion of the accounts that have unclaimed deposits belong to the nationalized banks. Post the mergers in the past couple of years, 11 banks that are considered as Nationalized banks in 2020, excluding the SBI group banks.
A total of 5.47 crore accounts have unclaimed deposits with these 11 Nationalized Banks with a total amount of Rs. 16.59 thousand crores as of 31 December 2020. Further, nearly 15% of the amount in unclaimed deposits i.e., Rs. 3.57 thousand crores are with the SBI group banks. These unclaimed deposits belong to 1.31 crore accounts.
A total amount of Rs. 2.9 thousand crores from 88.67 lakh accounts in unclaimed deposits are with the Private Banks as of 31 December 2020. While ‘Regional Rural Banks (RRB)’ have only Rs. 601 crores in unclaimed deposits, they belong to 37.65 lakh accounts. This could be due to the lower value of deposits with the RRB accounts. On the other hand, Rs. 612 crores is unclaimed from 6.61 lakh foreign bank Accounts as of 31 December 2020.
Bank of Baroda has the most amount in unclaimed deposits after SBI group banks
By the end of 2020, the total amount in unclaimed deposits with all the SBI group Banks were Rs. 3.57 thousand crores. These belong to 1.31 crore accounts.
Among the Nationalized Banks as mentioned earlier, Bank of Baroda has the highest amount in unclaimed deposits amounting to Rs. 2.87 thousand crores, second only to SBI group banks. This amount is more than the two other large public sector banks – Punjab National Bank and Canara Bank. However, the number of accounts with unclaimed deposits is lower than that of the other banks like Canara Bank, PNB, Union Bank of India, Indian bank each of which have more accounts with unclaimed deposits.
ICICI Bank is the only private bank in the list of top-10 banks with an unclaimed deposit of Rs. 809 crores in 22.74 lakh accounts.
Unclaimed Amount to be deposited in DEAF
As per the guidelines of RBI, any amount remaining unclaimed for more than 10 years has to be credited to the ‘Depositor Education and Awareness Fund’ (DEAF). This fund was established as per Section 26A of the Banking Regulation Act. The fund is to be utilized for the promotion of the Depositor’s interest.
The depositor is entitled to claim any of the unclaimed amount even after the amount has been transferred to the fund. The respective bank is liable to fulfill the claim along with the interest payable on the unclaimed amount.
As per the data available by the end of 2019, the total value of the interest credited on the unclaimed deposits is around Rs. 133 crores. A major portion of the unclaimed deposits are with savings accounts with around Rs. 12 thousand crores compared to 1.6 thousand crores in fixed deposits by the end of 2019.
Featured Image: Amount in ‘Unclaimed Deposits’