Big B playing for RBI

Awareness campaign should have been broad-based, including insurance policy holders, capital market investors & post office savers
Amitabh Bachan, the Bollywood actor in an RBI advertisement.
Amitabh Bachan, the Bollywood actor in an RBI advertisement. Screengrab

Amitabh Bachchan, popularly known as Big B, needs no introduction. The living legend of Bollywood is nowadays acclaimed more for his appearances in social advertisements than for his Bollywood movies.

This time, it’s the Reserve Bank of India’s (RBI’s) awareness campaign - RBI Kehta Hai – which has been garnering attention of common masses for the kind of aptly thoughtful messages delivered by the megastar.

Currently, we come across an awareness campaign in the media starring the megastar where he talks about unclaimed balance in inoperative bank accounts and asks the account holders of such accounts to visit their bank branches and claim the amount along with interest.

Remarkably, during the time of Covid-19 pandemic-induced lockdowns, the Big B promoted digital banking to be safe from the virus.

It’s noteworthy, the RBI under its ‘RBI Kehta Hai’ initiative keeps informing the general public about dos and don’ts that they have to follow while conducting a financial transaction safely and securely. For the past more than one year, the regulators keep on repeating the awareness messages about the bank customers’ rights and responsibilities.

The campaign to pull inoperative account holders to the bank branches to claim their amount is yet again an apt campaign. Unclaimed balance in multiple deposit accounts in banks has been only swelling despite intermittent awareness campaigns launched by the RBI in the past also. Crores of account holders are untraced and their accounts have been declared inoperative by the respective banks as per the RBI norms in vogue.

According to the data, at the end of the calendar year 2013, an amount of Rs. 5,124.98 crore was lying unclaimed in various deposit accounts in the banks. Today, as per the figures available and quoted by various media outlets, the unclaimed amount in inoperative deposit accounts as of March 2021, stands at whopping Rs. 39,264 crore and the amount is lying in the RBI’s Depositor Education and Awareness Fund (DEAF).

Notably, the Government of India in March 2014 empowered the Reserve Bank of India (RBI) to establish a Fund under the Depositor Education and Awareness Fund Scheme, 2014 by inserting section 26A in the Banking Regulation Act, 1949. As per this amendment, all banks are required to transfer money lying in accounts that have been inoperative for at least 10 years to the Fund. In fact, banks have to list out inoperative accounts every month and transfer funds lying in these accounts, along with interest accrued, by the end of the subsequent month.

The money in the Fund is invested in various financial instruments. The income thus earned is used for paying interest on the deposits as well as using it for investor awareness and education purposes. Here, it is important to note that the unclaimed balance transferred to the DEAF doesn’t mean the account holders lose their right to claim their money. They can claim their amount after furnishing necessary documents in line with the KYC norms.

Actually, unclaimed money deposit accounts is not only an issue with banks, thousands of crores of rupees are unclaimed in post office schemes (popularly known as small savings schemes) like Post Office Savings Accounts, Recurring Deposit Accounts, Time Deposit Accounts, Monthly Income scheme, Senior Citizens’ Savings Scheme Accounts, Kisan Vikas Patra, National Savings Certificates, Sukanya Samriddhi Accounts and discontinued Small Savings Schemes. As per the rule, “inoperative account” means an account under any of the schemes not operated upon for a period of three years if operable on regular basis, or if there is a date of maturity, from date of maturity, as the case may be.

The money in these unclaimed accounts gets transferred to the Senior Citizens’ Welfare Fund, which was launched by the government in 2016.

Same is the case with the insurance sector. According to the Insurance Regulatory and Development Authority (IRDAI), unclaimed money amounting to Rs 25,000 crore is lying with various insurance companies falling in private as well as public sector operating in the country. Life Insurance Corporation (LIC) of India has the largest portion of the unclaimed money. The largest insurer of the country had recently disclosed the unclaimed funds to the tune of Rs 21,539 crore (including interest earned over the outstanding unclaimed amount) as of September 2021 in its books.

The insurance regulator defines the unclaimed money in the context of insurance as “any amount payable to policyholder as death claim, maturity claim, survival benefits, premium due for refund, premium deposit not adjusted against premium and indemnity claims etc. remained unclaimed beyond six months from the due date for settlement of the claim amount”.

To sum up, an article published in The Economic Times (ET) in July 2021 about the scenario around the overall unclaimed money in the financial system, is worth quoting. It says that all regulators put together, collectively hold over Rs.82,000 crore or more that legitimately belongs to Indian savers. (Rs 82,000 crore lying in unclaimed bank a/cs, life insurance, mutual funds, PF: How to get your money back).

Now, the most important question: What is the main reason that people leave their money unattended and forget to claim it?

It doesn’t need any rocket science calculations to answer the question. Firstly, let us bear it in mind that nobody with a conscious state of mind surrenders his/her hard earned money to the bank or any other financial institution.

The main reason for funds remaining unclaimed is the demise of account holders/policyholders without leaving any will and without informing their families about their bank accounts, insurance policies, etc. We may find a nominee in an unclaimed account, but the proper address and contact details of the nominees are mostly missing and make it difficult to trace the account holder.

We have also observed in the case of a deceased account holder that after getting to know about an unclaimed amount in a deposit scheme or insurance policy, the legal heirs mostly get entangled in a family dispute for decades and there are also cases where they are unable to comply with the KYC formalities.

And, of course, the financial institutions and the banks too are held responsible to make it full of hassles for the inoperative account holders to access their monies.

Meanwhile, in view of the increase in the amount of the unclaimed deposits with banks and other financial institutions (FIs) year after year and the inherent risk associated with such deposits, there’s need from the banks and other financial institutions to play a pro-active role in finding the whereabouts of the account holders whose accounts have remained inoperative.

A serious effort at the branch level where the account was actually opened can track down the untraced account holders. Why can’t banks and other FIs launch a special drive in this regard? Even the staff can be incentivised for locating an inoperative account holder.

Lastly, with regard to the RBI’s awareness campaign driven by the megastar Amitabh Bachchan about the unclaimed bank deposits, it would have been prudent for the regulators such as IRDAI and SEBI to join hands with the banking regulator, RBI, in this most important awareness campaign.

As per the data available, both these regulators have almost Rs.50 thousand crore unclaimed money in their kitty, which is higher than the share of banks in the overall unclaimed money in the country’s financial system.

(The views are of the author & not the Institution he works for)

Disclaimer: The views and opinions expressed in this article are the personal opinions of the author.

The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.

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