What happens to unclaimed Bank Savings Accounts and Deposits?

Do you know what happens to your unclaimed Bank Savings Accounts and Deposits? For how many years will banks retain Savings Accounts and Deposits with them?

In my earlier post, I explained what will happen to your unclaimed Mutual Funds. You can refer to the same “What happens to unclaimed Mutual Funds in India?“. In this post, I will explain to you what happens to unclaimed Bank Savings Accounts and Deposits.

What happens to unclaimed Bank Savings Accounts and Deposits?

Many of us may have several savings accounts. After opening them for certain purposes, we use them for few years and then we forget about such accounts. In fact, even we forget the balance available in such accounts. In such a situation, for how many years banks will maintain such accounts?

Let us assume that you have opened a Bank Fixed Deposit and not opted for auto-renewal or the option to credit the principal and interest to your savings account post-maturity. Then what will happen to such accounts if you do not claim the deposits?

Regarding the Bank Fixed Deposits, RBI introduced new rules in 2021 (Refer to “RBI FD Rules 2021 – Auto-Renewal FDs discontinued?“), in this, it is clearly mentioned that if you do not claim your deposits post maturity, then banks will either pay the bank’s savings account rate or the Bank FD rate (as per the FD rate applicable at the time of booking FD), WHICHEVER IS LESS. Indirectly, you must assume that it’s banks’ savings account rate only as in many cases, the savings rate is always less than the FD rates.

Now, even if you have not claimed the money available in your savings account or matured Bank FDs for 10 years, then the money will be moved to the Depositor Education and Awareness Fund (DEAF).

What is Depositor Education and Awareness Fund (DEAF)?

All funds that remain unclaimed for 10 years or more in banks, such as those in savings accounts, fixed and recurring deposits, and demand drafts, are allocated to a fund known as DEAF. This fund is utilized for the purposes of enhancing depositor awareness and ensuring their protection. The accounts which are included under DEAF are –

1. savings bank deposit accounts;
2. fixed or term deposit accounts;
3. cumulative/recurring deposit accounts;
4. current deposit accounts;
5. other deposit accounts in any form or with any name;
6. cash credit accounts;
7. loan accounts after due appropriation by the banks;
8. margin money against the issue of a Letter of Credit/Guarantee etc., or any security deposit;

The banks are required to transfer the entire amount, including the accrued interest, as on the date of transfer to the DEA Fund.

To claim the money moved to DEAF, customers or depositors have to request a refund of any unclaimed amounts from their respective banks. Upon receiving a claim request from the customer or their legal heirs (in the event of the depositor’s death), the banks are obligated to reimburse the customer or depositor, including applicable interest for Interest-Bearing deposit accounts. Subsequently, the banks will file a claim for reimbursement from the DEA Fund, which is maintained by the Reserve Bank of India, for the equivalent amount disbursed to the customer or depositor.

There is no specific time limit prescribed in the Scheme for claiming a refund from the DEA Fund by the customer/ depositor. However, the customer/ depositor or the legal heirs (in the case of the deceased depositor) are encouraged to claim such amounts as soon as they become aware of unclaimed amounts.

Now what happens when you approach the bank to claim your amount but a bank is bankrupt? In the case of a bank under liquidation, the depositor has to approach the Liquidator of the bank for a claim and the Liquidator would settle the claim as per the following procedure.

• If the claim amount is below Rs.5 lakh, then you will get the amount through the process of DICGC insurance (Up to Rs.5 lakh.
• If the claim amount is more than Rs.5 lakh, then the Liquidator shall seek reimbursement for any amount exceeding the DICGC insurance coverage (i.e., above ?5 lakh) solely on a reimbursement basis. This means that the Liquidator will disburse the excess amount to the depositor, contingent upon fulfilling all relevant requirements, and subsequently file a claim with the DEA Fund for reimbursement.

Conclusion – To avoid all complications, it is better to have a minimal number of savings accounts and track them properly. If you feel any account is useless, then better to close it rather than continue it. Regarding FDs, make sure to share such information with the family (especially if the FD is not in auto-renewal mode or you have not opened the deposit maturity proceeds to be credited to your account. Otherwise, once you forget your money, then it is a cumbersome process to get back the money from banks.

Please check for any such accounts or balances by using the platform called UDGAM (UDGAM – Check Unclaimed Deposit Online of all banks“.