Unclaimed Deposits/Inoperative Accounts

What is the Procedure in Declaring Deposits as Unclaimed?

The process begins when the bank accounts are first considered inoperable.   

Savings and current accounts are considered inoperative or inactive if there have been no transactions in them (by the customer or a third party) for a period of more than 2 years.  

Fixed and recurring deposits become inoperative when the amount of the deposit remains unclaimed after a period of 2 years, unless it is on automatic renewal. 

How to Seek a Refund of Unclaimed Deposit if the Primary Account Holder is Deceased? 

If the account holder has passed away and there are no registered nominees, or if there is a registered nominee who has also passed away, then the beneficiary can make the claim according to the testamentary document of the account holder or account holders, or if the beneficiary has died without a will, then according to the relevant succession laws. 

The claimant must provide supporting documents that mention the relationship between the claimant and the account holder. The claimant's KYC documents must include a notorised death certificate of the account holder. 

Banks may also ask for an ‘heirship certificate’ (for small amounts), ‘succession certificate’ or ‘letter of administration’ (for large amounts) or ‘probate testamentary document’ (‘probate will’). Very few banks also process claims based on an ‘affidavit and indemnity and/or No objection certificate’ (from all family members), but this is at the sole discretion of the bank. 

Unclaimed Deposits/Inoperative Accounts 

Unclaimed Bank Deposits: What Are They? 

 Unclaimed deposits refer to deposits where the proceeds or maturity amount has not been claimed for 10 years or longer. In simpler terms, term deposits are considered unclaimed if they remain inactive or inoperative for more than 10 years. The same principle applies to accounts as well. 

What Takes Place When Deposits and Accounts Are Marked as Unclaimed or Inactive? 

 Unclaimed fixed deposits and inactive bank accounts that have remained dormant for 10 years will initially be transferred to the bank's head office. Subsequently, one of the following scenarios may occur: 

1. If the fixed deposits have matured and the proceeds remain unpaid, the unclaimed amount will accrue interest at either the rate applicable to savings accounts or the contracted rate of interest on the matured term deposit, whichever is lower. 
2. Alternatively, the funds may be transferred to the Deposit Education and Awareness Fund, which primarily consists of inactive term deposits and accounts that have not been operated or claimed for 10 years. Banks are mandated to transfer balances from these dormant accounts to the Fund every calendar month. 

Regardless of the scenario, it is possible to claim the unclaimed funds. The Reserve Bank of India (RBI) has implemented measures to facilitate the retrieval process for individuals. All banks are required to publish details of inactive bank accounts and term deposits on their websites, listing only the names of the account holders and their addresses. 

Some banks offer search criteria such as PAN card details, date of birth, name, and telephone number to assist users in refining their searches. Moreover, banks must clearly outline the procedure for claiming the funds on their websites. Therefore, individuals can conveniently visit the bank's website to search for unclaimed accounts or deposits and initiate the reclaiming process from there. 

What steps may they take to prevent their deposits from being deemed unclaimed? 

Some of the steps you may take to ensure your deposits are not deemed unclaimed are given below: 

1. Adding nominees to your bank account - Adding nominees to your bank accounts and deposits is a crucial preventive step against their classification as unclaimed. By nominating individuals who would inherit the funds in the event of your unfortunate demise, you ensure that rightful beneficiaries have prompt access to the funds without encountering unnecessary delays. 
2. Maintaining transparent communication with your family members -  By sharing information about your deposits, your loved ones become aware of the various accounts you hold, equipping them better to manage them in unforeseen circumstances. This proactive approach significantly reduces the likelihood of your funds being deemed unclaimed. 
3. Updating your KYC details - Regularly updating your Know Your Customer (KYC) details with your bank is not only a regulatory requirement but also a prudent measure to prevent your deposits from becoming unclaimed. Ensuring accuracy and currency of your contact information, address, and other pertinent details facilitates smoother communication between the bank and yourself or your nominees. 
4. Closing of unnecessary accounts - Having multiple bank accounts that you no longer actively use increases the risk of funds becoming unclaimed. Periodically reviewing your accounts and closing redundant ones is advisable. Consolidating your funds into a few active accounts simplifies financial management and reduces the likelihood of any account falling into the unclaimed category. 
5. Keeping your FD slips safe - When investing in fixed deposits (FDs), keeping the FD slips safe and accessible is imperative. These documents serve as evidence of your investments and are crucial for your nominees or beneficiaries to claim the funds. Storing these slips securely and informing your family members about their location ensures a seamless process in case the FD needs to be claimed.