Explainer: What is the Depositor Education and Awareness Fund Scheme?
Sai Krishna Muthyanolla
May 18, 2020
Thousands of crores lie unclaimed in bank deposits. The RBI launched the Depositor Education and Awareness Fund Scheme in 2013 to make use of these unclaimed deposits. Here is a detailed explainer of the scheme.
The Depositor Education and Awareness Fund Scheme (DEAF Scheme) was established by the Reserve Bank of India (RBI) in 2014 for the promotion of depositors’ interest and for any other related purposes deemed necessary by the RBI.
This fund was established pursuant to the Monetary Policy Statement 2013-14, announced by the Governor of RBI on  03 May 2013.
Accordingly, an amendment was made to Banking Regulation Act, 1949, and Section 26 A was inserted into the Act, authorising RBI to establish this fund.
Amount in Non-operative accounts to be transferred to the Fund
A specific account is maintained by RBI for Depositor Education and Awareness Fund (DEAF). RBI has directed the following types of amounts to be transferred to this fund.
These include :
RBI can specify any other accounts beyond those listed above, from time to time. The amount to be transferred also includes the accrued interests which the bank would have paid to the customer.
As per a RBI circular dated 02 February 2015, it is mandatory for banks to display on their websites,  the list of unclaimed deposits/inoperative accounts which are inactive or inoperative for more than 10 years. This activity needs to be carried out every  month by the banks and the unclaimed amounts are to be transferred to RBI by the end of each month.
Respective banks are required to submit returns of these unclaimed amounts which are deposited in DEAF account. Form I & II are used by the banks to submit these returns.
Provision for refund of the amount, if claimed by the depositor
The DEAF scheme provides the option for depositors to reclaim the amount, even after it has been transferred to DEAF.
A Committee constituted to manage DEAF
RBI’s notification about the constitution of the DEAF Scheme, provides for formation of a committee to administer and manage the DEAF.
As per the RBI notification, the Committee comprises of :
More than Rs. 25 thousand crores deposited in DEAF
As per RBI’s Annual Report for 2018-19, DEAF has a total of Rs. 25,747 crores in its account. The amount being deposited into DEAF account has consistently increased over the years. In 2017-18, this amount was Rs. 19,567 crores.
In 2013-14, the total amount deposited in DEAF account was Rs. 2,795 crores i.e. in the six years since the establishment of the fund, there has been an almost 10-fold increase in the amount deposited in this fund. (It has to be noted that there was no deposit into DEAF at the end of 2012-13 although the fund was constituted during that Fiscal year ).
All this amount, as is the specification of deposits into DEAF , is unclaimed or derived from non-operative accounts. The initiatives to drive the banks to recognise non-operative accounts and transferring the funds to DEAF are a major reason for the increase in the amount deposited in DEAF. However, it needs to be noted that most of this amount  rightfully belongs to the depositors. This is an interest free deposit at the disposal of RBI, unless a claim is made.
There are multiple reasons cited for such a large amount in non-operative accounts. A single depositor may have multiple accounts and may not track all their accounts. It is also possible that depositors may not reveal the account details to family members or close kin. This becomes problematic in the wake of death or other emergency situation of the depositor making it impossible for the family members to withdraw amounts. There could be many other reasons for unclaimed deposits and inoperative accounts.
While KYC reforms have helped in better tracking of the depositors, special efforts are required in reaching out to beneficiaries of older deposits which lay unclaimed. Banks could look at proactively encouraging its customers to check for their accounts in the non-operative accounts list published on the website. Search option could be enabled on the bank websites to make this easier. Creating awareness among the depositors encouraging them to disclose the Bank account information to the nominees etc. can help in reducing the amount in unclaimed deposits.
Featured Image: Depositor Education and Awareness Fund Scheme