The interest rate payable by banks to depositors or applicants on the unclaimed amount transferred to the Depositors’ Education and Awareness Fund will be 3.5% simple interest per annum as of July 1, 2018 instead of 4% currently.
When an unclaimed amount is transferred to the Depositors’ Education and Awareness Fund (DEAF), the bank must reimburse a depositor or any other applicant, claiming the deposit or unclaimed (even after the amount has been transferred to DEAF ), at a rate specified by the Reserve Bank of India. Currently it is 4 percent per annum, but in the future it will be 3.5 percent straightforward interest. The settlement of all claims received by banks as of July 01, 2018 will be at this rate, until further notice.
According to reports, unclaimed deposits from bank account holders have crossed a record high of Rs 8,000 crore, with stricter KYC standards making it difficult to extract funds unless the deceased’s next of kin can establish the legitimacy of their complaints.
According to the latest figures released by the Reserve Bank of India (RBI), Rs 8,864.6 crore was unclaimed on 2.63 crore accounts with all banking groups as of December 2016. Ironically, deposits not claimed doubled in four years between 2012 and 2016 – both in terms of volume and value – despite growing political support for genuine deposit holders seeking to withdraw funds.
In accordance with the rules, the amount of any account with a bank that has not been operated for a period of ten years or any deposit or any amount not claimed for more than ten years will be credited to the Education and Awareness Fund. depositors, within three months of the expiration of said ten-year period.
The Fund will be used for the promotion of the interests of depositors and for other purposes which may be necessary for the promotion of the interests of depositors, as specified by the RBI from time to time.
The depositor would, however, have the right to claim his deposit or any other unclaimed amount from the bank or to operate his account after the expiration of ten years, even after this amount has been transferred to the Fund. The bank would be required to pay the amount to the depositor or applicant and to demand repayment of that amount from the Fund.