DEA Fund: The Mystery of the ‘Missing’ Rs7,624 Crore
Moneylife Digital Team 22 December 2021
Every year, banks transfer money from inoperative accounts for 10 years to the depositor education and awareness fund (DEAF) scheme of the Reserve Bank of India (RBI). As of 31 March 2021, the DEAF scheme had a balance of Rs31,640.05 crore that are unclaimed deposits transferred by banks, says Dr Bhagwat Karad, minister of state for finance. However, RBI’s annual report for FY20-21 shows that  DEAF had a balance of Rs39,264 crore as on 31 March 2021. So the question is: where are the Rs7,624.21 crore missing from the minister’s answer?
 
In a written reply in the Lok Sabha, Dr Karad says, “RBI has informed that the balance of unclaimed deposits transferred to the DEA Fund as on 31 March 2021 is Rs31,64,004.52 lakh (Rs31,640.04 crore).”
 
 
However, according to RBI’s annual report, the balance lying in the DEAF increased 18% to Rs39,264 crore as of 31 March 2021 from Rs33,114.46 crore in FY19-20.
 
 
(Source: RBI’s Annual Report 2020-21; page254)
 
There is an apparent mismatch between the figures disclosed by Dr Karad in the Lok Sabha and what RBI has published in its annual report.
 
Further, during FY20-21, the DEAF spent Rs164.90 crore on mass media campaigns for depositor education and awareness, the Lok Sabha was informed.
 
According to the minister, during FY20-21, the DEAF granted just Rs2.28 crore to registered non-government organisations (NGOs) to conduct depositor education and awareness.   
 
“The DEAF is utilised for promotion of depositors’ interests and for such other purposes which may be necessary for the promotion of depositors’ interest as may be specified by the RBI,” the minister says.
 
Member of Parliament (MP) DK Suresh had asked about the total amount deposited and the utilisation of the DEAF. 
 
In his response, the minister says, during FY20-21, the DEAF incurred an expenditure of Rs874.87 crore. Out of this, Rs707.67 crore were from interest on interest-bearing deposits, while Rs164.90 was spent on mass media campaigns. 
 
“In case of demand from a customer whose deposit had been transferred to the DEAF, banks are required to repay the customer, along with interest if any, and lodge a claim for a refund from the DEAF,” the minister says.  
 
In terms of the scheme, banks calculate the cumulative balances in all accounts that are not operated upon for ten years or more or any amount remaining unclaimed for 10 years or more along with interest accrued and transfer it to DEAF.
 
In an email response to Moneylife, about the mismatch of Rs7,624.21 crore, the department of financial services says, "RBI was consulted in the matter. RBI has clarified the following in this regard. The DEA Fund balance with RBI is different from the balance of unclaimed deposits transferred to the DEA Fund. The unclaimed deposits transferred to DEA Fund (totalling Rs31,640.04 crore) form a part of the DEAF balances held with RBI. Therefore, the amount of Rs39,264.25 crore reported in RBI's balance sheet for FY20-21 includes Rs7,624.21 crore due on interest payable on interest-bearing deposits, provision for expenses and cumulative surplus of income over expenditure for FY20-21." 
 
Moneylife has repeatedly written about the difficulty in having bank accounts unfrozen and made operative again. Despite stringent know-your-customer (KYC) requirements, the constant accretion to DEAF is testimony to the callousness of a system that makes it difficult for funds to be transferred to rightful claimants. 
 
In the case of death, each bank makes up its own rules to transfer funds (‘Zindagi ke baad bhi’: COVID and the Worries about Transmission and Succession); some even arm-twist heirs to park it in fixed deposits with the same banks. 
 
Apart from the red-tape involved in obtaining succession certificates, some banks, in addition to succession certificates, demand two sureties from unrelated persons—which is an entirely unreasonable demand. (Read: Shouldn’t Regulators Be Accountable for Returning Rs82,000 Crore of Unclaimed Money To Savers?)
 
How to Claim Deposits Transferred to DEA?
 
Unclaimed fund or account balance transferred to the DEAF does not mean that the customer cannot claim it. The customer has to approach the bank and submit a prescribed form and the necessary documents. 
 
The form is available at the branch or can be downloaded from the bank’s website. 
 
If the claimant is the legal heir of the account-holder, then she needs to also attach the death certificate of the (primary) account-holder, along with the form. 
 
Once the bank verifies the details, it allows the claimant to convert the inoperative or unclaimed account to a regular one and activate transactions. 
 
For legal heirs, the regular claim settlement procedure is followed by the bank.  
 
In case of demand from the customer or depositor, whose unclaimed balance or FD is transferred to the DEAF, the banks need to repay the customer or depositor, along with interest if applicable. 
 
The bank then lodges a claim for a refund from the Fund for an equivalent amount paid to the customer or depositor.
 
Comments
aathiarasu88
3 months ago
I am a brother deaf sad govt what happens??????
sivakumar_go
5 months ago
They try whether they can have the same amount of luck exists in other industries. Though it is not a crime to diversify into unrelated areas but what they should ensure is that they pick the right industry for diversification. I have seen many people losing money in sugar industry which is seasonal and cyclical. . Hope KPR Mills will earn enough surplus to sustain their sub in case they need cash support.
yerramr
5 months ago
Depositor Awareness campaigns - Can the Banks or RBI say how many such campaigns were conducted and how many participated region-wise and district-wise? When even the mandated monthly customers' meets are not held or held only on paper to satisfy the regulator how do you expect a truthful picture of DACs from DEF?
C V MANIAN
Replied to yerramr comment 5 months ago
Even an answer given to an MP is confusing. Leave alone, common depositors. Unless there is total transparency in the bank's approach to customer relations, all their replies would be negative and it would take enormous efforts for the customers to claim their money. They must follow up relentlessly to get justice.
saharaaj
5 months ago
Govt collect fund for one and diverts to other at will voters sleep
deepak.narain
5 months ago
Government and its institutions are mostly disastrous to the people. They make rules but do not follow those rules themselves. Leaders are hopeless as ever. Nobody listens!
pgodbole
5 months ago
The article's headline is unnecessarily sensational, particularly in view of email clarification provided by DFS in Finance ministry. While other details (such as how to claim deposit transferred to DEA Fund) are informative, emphasis on difference of Rs.7624 crores could have been avoided.
bhaskar.jain
5 months ago
DEAF - What a great acronym which is truly reflecting on our great lethargic bureaucratic systems
Kamal Garg
Replied to bhaskar.jain comment 5 months ago
Yes, I agree with acronym DEAF - a clear case of reflecting our lethargic and unaccountable government employees but a complete apathy towards such sensational money involving issues.
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