As we approach the end of 2023, the finance ministry has informed Parliament of a shocking 28% increase in unclaimed deposits, totaling Rs42,270 crore on 31 March 2023. This amount has risen from Rs32,934 crore during the previous fiscal year. But what’s even more staggering is that this figure only represents a quarter of the money locked away in ‘inoperative’ bank accounts.
It is estimated that nearly Rs One lakh crore, the earnings of ordinary people, is lying with banks under the head ‘inoperative accounts’. While some of these accounts may become operative, many are on their way to being classified as ‘unclaimed funds’.
The data provided to Parliament indicates that of the unclaimed deposits, only Rs6,087 crore were with private banks, while public sector banks (PSBs) accounted for the bulk at Rs36,185 crore. Furthermore, only PSBs are subject to the Right to Information (RTI) Act.
Inoperative bank accounts are considered ‘unclaimed’ when they have remained inactive for at least 10 years, at which point they are transferred to the depositor education and awareness fund (DEAF) of the Reserve Bank of India (RBI). On the other hand, a bank account that is not operated for two years is termed ‘inoperative’ and there is a complex process to get it activated again. Moreover, data about inoperative accounts is not publicly available.
In light of this, Aakash Goel filed an RTI application in August 2023 with the department of financial services (DFS) of the finance ministry in hopes of obtaining comprehensive information on such accounts. The application was transferred to RBI, which then forwarded it to 11 PSBs. However, 10 banks ignored the RTI query until Mr Goel filed a first appeal at the end of September 2023.
The replies from the 10 banks were revealing. Canara Bank has 1.40 crore unclaimed accounts and 2.64 crore inoperative accounts, with Rs12,451 crore in these accounts at the end of March 2023. P&S Bank, on the other hand, has the lowest unclaimed accounts at 12.86 lakh and 48.15 lakh inoperative accounts, with Rs1,823 crore in them. These examples illustrate how widespread this issue is.
It is estimated that there is at least Rs One lakh crore in inoperative accounts alone. This does not even include India Overseas Bank and SBI’s figures, which would add another 50% to this amount. With a death rate of 0.7% annually, an alarming 90 lakh people pass away each year, which could explain why so much money is lying in unclaimed accounts.
The issue of unclaimed and inoperative bank accounts has been a topic of concern since 2014 when the late Arun Jaitley, as finance minister, drew attention to dormant funds lying with banks in his Budget speech. A committee was set up under the chairmanship of the deputy governor of the RBI to study unclaimed amounts and recommend how this money can be used to protect the financial interests of senior citizens. It’s clear that this issue has been a long-standing problem, and it’s time for the government to address it.
As we approach the general elections, it is vital for the government to take on the challenge of accounting for people’s privately earned income and returning it to their rightful owners. This issue affects countless individuals, and it is crucial for steps to be taken to rectify the situation.
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