1273502, Amandeep Kaur, Sec-A,MBA(F1)

Q4        Unclaimed Deposits – Are banks doing enough?

Ans)    INTRODUCTION:-  What is unclaimed deposits?

CLASSIFICATION OF UNCLAIMED DEPOSITS: 

a) Operative Accounts: 

An account shall be classified as unclaimed deposits if the same is not operated (other 

than interest credits and service charge debits) for 10 years and more from the date 

of last operation. 

b) Term Deposits: 

A term deposit account shall be classified as unclaimed deposit if the same is not renewed/withdrawn after 10 years or more from the date of maturity. 

PROCEDURE ON MAINTENANCE OF UNCLAIMED DEPOSITS: 

Transfer of Unclaimed Deposits: 

CASA Deposits: 

CASA accounts completed 10 years from the date of last operation (other than 

interest credits and service charge debits) will be marked as Unclaimed Deposits by 

the CBS system and the home branch will be changed from the original branch to BS & 

CA Section, Head Office (0401) during EOD operation on daily basis. 

After changing the home branch as BS & CA Section, Head Office (0401), Branches can 

only view such CASA accounts and no operations are permitted in the accounts at 

Branch level. 

For repatriation of CASA Deposits, Branch has to take up with BS & CA Section, Head 

Office (DP code – 0401) duly complying with the existing procedures. 

 After ensuring the genuineness of the claim by the branch, BS & CA Section, Head 

Office (0401) will change the status of unclaimed CASA account to regular and change 

the DP Code of home branch from Head Office (0401) to the original branch by using 

the option BA995. The transfer will happen during EOD operations. 

Even after revival, the same account number can be retained duly complying with 

KYC norms as the CASA account is not getting closed at the time of transfer as 

unclaimed deposits.

Term Deposits: 

For repatriation of Term Deposits, Branch has to take up with BS & CA Section, Head 

Office (DP code – 0401) duly complying with the existing procedures. 

To enable inquiry of the TD Unclaimed recon number, a new screen is proposed 

whereby the user will enter the TD account number and system will display all the 

deposits that are in Unclaimed GL along with their respective recon numbers and the 

status of each recon number. If the status of the recon number is ‘Paid’, then the 

corresponding Date on which this is paid will also be displayed. 

The new screen will display the above information irrespective of whether the amount 

has been paid out / reconciled or not. The basic information of the account viz., 

account title, currency, branch etc will be displayed as provided in conventional FCR 

inquiry screens. 

Discussion:

1. The recent buzz behind RBI reprimanding banks for not being pro-active in tracing customers of unclaimed deposits / in-operative accounts and the strict guidelines enforcing banks to display the name and address of such account holders on their websites, latest by September 30, 2012, with a further maintenance of such list, has got one thinking, are banks even following the basic KYC due diligence norms? If they would have, would there be such a huge occurence of unclaimed deposits, causing RBI to enforce such specific instructions!

Alternatively, one wonders as to what prevents banks from tracing down customers of such unclaimed / in-operative accounts. Is it the lack of interest or sheer man-power shortage which prevents them from doing so? If so, should there not be a collaboration or nexus that helps all banks trace down such account holders, through mutual co-operation and sharing of information amongst each other?!

• What is the best way of going about this mammoth task?
• What safeguards should be taken to ensure that such a list does not become a loop-hole for frauds to lay their hands on someone else's money?
• What are the other parameters that would be required, other than the 'Find' search facility to make this list user-friendly?

Conclusion:

 There should be provision in the application package of the banks (including co-operative banks) for automatic transfer of accounts to the in-operative /unclaimed accounts as and when they fall under these categories based on the present RBI prescription.

Banks may not be forced to trace the customers of unclaimed deposits / in-operative CASA accounts where balance is below the minimum required.
Branch head’s/higher level authentication should be made mandatory for allowing operation of such accounts.
While publishing the list in the web-site minimum information need only be included so as to avoid frauds of impersonation etc.
Bank branches should trace down such accounts by all modes of communication. If the an account holder is not traceable, the account holder may be tracked through his/her introducer. 
Census and such other database may be utilized to locate the persons whose present address are not known.

 Unclaimed deposits list should be common for all banking system and displayed on IBA/RBI website. If my account is unclaimed, chances are high that I have forgot which bank I had lying small amounts of funds (small for some is big for others).If there is a consolidated list one can just look into one's own name as well as old/expired/sick relatives name and claim.

I wonder why this is not thought/why this would be difficult to implement...