As 2023 draws to a close, the finance ministry informed Parliament of a surprising 28% increase in unclaimed deposits to Rs42,270 crore on 31 March 2023 (against Rs32,934 crore during FY21-22). Get ready for an even more staggering truth: this figure of unclaimed deposits represents a mere quarter of the money that is locked away in ‘inoperative’ bank accounts.
A stupendous sum of nearly Rs1 lakh crore, by conservative estimates, representing the earnings of ordinary people is lying with banks under the head ‘inoperative accounts’; while some of these may become operative, it represents money that is on the way to being classified as ‘unclaimed funds’. Allow me to explain.
Information provided to Parliament shows that of the unclaimed deposits of Rs42,270 crore, only Rs6,087 crore were with private banks; public sector banks (PSBs) accounted for the bulk, at Rs36,185 crore. Moreover, only PSBs are subject to the Right to Information (RTI) Act.
Bank accounts are classified as ‘unclaimed’ when they have remained inoperative for at least 10 years; these are then 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 rather cumbersome process to get it activated again. Also, data about inoperative accounts is not publicly available.
So Aakash Goel, an engineer, management graduate and chartered financial analyst, filed an RTI application with department of financial services (DFS) of the Union finance ministry in August 2023, hoping to obtain comprehensive information on such accounts. DFS promptly transferred the application to RBI, which, in turn, forwarded it to 11 PSBs. All of them ignored the RTI query until Mr Goel filed a first appeal at the end of September 2023.
Then, too, the results were partial. Only 10 out of 12 banks responded. Indian Overseas Bank has yet to respond. State Bank of India (SBI), shockingly, claimed that it does not even collate this basic information – an answer that ought to receive special attention from the banking regulator.