Over Rs1 Lakh Crore Lying in Inoperative Bank Accounts on Way To Becoming Unclaimed Funds
As 2023 draws to a close, the finance ministry informed Parliament of a surprising 28% increase in unclaimed deposits to Rs42,270 crore on 31 March 2023 (against Rs32,934 crore during FY21-22). Get ready for an even more staggering truth: this figure of unclaimed deposits represents a mere quarter of the money that is locked away in ‘inoperative’ bank accounts.
 
A stupendous sum of nearly Rs1 lakh crore, by conservative estimates, representing the earnings of ordinary people is lying with banks under the head ‘inoperative accounts’; while some of these may become operative, it represents money that is on the way to being classified as ‘unclaimed funds’. Allow me to explain. 
 
Information provided to Parliament shows that of the unclaimed deposits of Rs42,270 crore, only Rs6,087 crore were with private banks; public sector banks (PSBs) accounted for the bulk, at Rs36,185 crore. Moreover, only PSBs are subject to the Right to Information (RTI) Act. 
 
Bank accounts are classified as ‘unclaimed’ when they have remained inoperative for at least 10 years; these are then transferred to the depositor education and awareness fund (DEAF) of the Reserve Bank of India (RBI). On the other hand, a bank account that is not operated for two years is termed ‘inoperative’ and there is a rather cumbersome process to get it activated again. Also, data about inoperative accounts is not publicly available. 
 
So Aakash Goel, an engineer, management graduate and chartered financial analyst, filed an RTI application with department of financial services (DFS) of the Union finance ministry in August 2023, hoping to obtain comprehensive information on such accounts. DFS promptly transferred the application to RBI, which, in turn, forwarded it to 11 PSBs. All of them ignored the RTI query until Mr Goel filed a first appeal at the end of September 2023. 
 
Then, too, the results were partial. Only 10 out of 12 banks responded. Indian Overseas Bank has yet to respond. State Bank of India (SBI), shockingly, claimed that it does not even collate this basic information – an answer that ought to receive special attention from the banking regulator. 
 
The questions Mr Goel asked were: 
a. Number of bank accounts which are inoperative as of 31 March 2022.
 
b. Out of the above, the number of bank accounts which are classified as dormant/unclaimed deposits as of 31 March 2022.
 
c. Total balance of bank accounts which are inoperative as of 31 March 2022.
 
d. Out of above, the total balance of bank accounts which are classified as dormant/unclaimed deposits as of 31 March 2022.
 
e. Number of bank accounts which are inoperative as of 31 March 2023.
 
f. Out of above, number of bank accounts which are classified as dormant / unclaimed deposit as of 31 March 2023.
 
g. Total balance of bank accounts which are inoperative as of 31 March 2023.
 
h. Out of above, total balance of bank accounts which are classified as dormant / unclaimed deposits as of 31 March 2023.
 
The replies are astonishing:
 
1. Canara Bank seems to have the highest unclaimed accounts at 1.40 crore and its inoperative accounts are 2.64 crore. It had Rs12,451 crore in these accounts at the end of March 2023, which is the lowest multiplier of 2.1.
 
2. P&S Bank has the lowest unclaimed accounts at 12.86 lakh and inoperative accounts are at 48.15 lakh. The amount in inoperative accounts is Rs1,823 crore at the end of March 2023, which is 2.6 times.
 
3. BoB had 75.86 lakh unclaimed accounts, while the inoperative ones are 5.64 crore accounts. The amount blocked at end of March 2023 is Rs18,055 crore which is 4.3 times.
 
4. Central Bank admitted to 27.75 lakh unclaimed accounts, while inoperative ones were 1.59 crore accounts. The amount blocked in inoperative accounts was at a surprising low at Rs7,247 crore at end of March 2023.
 
5. UCO Bank said it had 15.12 lakh unclaimed accounts, but inoperative accounts were 1.52 crore, the money in those accounts was even lower at Rs5,433 crore at the end of March 2023.
 
6. Indian Bank has provided some surprising numbers. It claims 10.81 lakh unclaimed accounts, while inoperative ones are a shocking 2.63 crore. The money blocked is Rs9,698 crore in such inoperative accounts at the end of March 2023, which is 32.1 times.
 
7. Bank of Maharashtra is another major outlier. It has 4.29 lakh unclaimed accounts and 56.44 lakh inoperative accounts at the end of 31 March 2023. The money blocked in inoperative accounts, however, is Rs2,811 crore which is 57.4 time multiple.
 
8. Punjab National Bank admits to 1.24 crore unclaimed accounts and 4.37 crore inoperative accounts at end of FY22-23. The money blocked in such inoperative accounts is Rs14,606 crore a 2.2 time multiple despite such large numbers. 
 
9. Bank of India has 92.01 lakh unclaimed accounts and 5.43 crore inoperative accounts at end of FY22-23. The money in inoperative accounts is Rs12,261 crore, a multiple of 4 times.
 
10. Union Bank of India had 7.25 crore inoperative accounts, which had Rs18,842 crore in them at the end of FY22-23. A multiple of 4.9. It strangely did not provide information on unclaimed accounts, claiming it was unavailable, although UDGAM ought to have this and even more granular details. 
 
11. SBI, by far the biggest PSB in India, provided a typically arrogant response. It claimed that it does not bother to compile centralised information on the number of inoperative accounts and, even if it had them, that would be confidential information.
 
The table below provides a quick compilation and analysis of the data by Mr Goel. 
 
 
As per these facts, the amount in inoperative accounts alone is Rs1,03,230 crore. This does not include Indian Overseas Bank and the behemoth SBI’s figures, which would add another 50% to this amount. The government has admitted that the total unclaimed funds in the banking system were Rs42,272 crore at the end of March 2023, of which PSBs account for Rs36,185 crore. Assuming that private banks with unclaimed deposits of Rs6,087 crore have only twice the number of inoperative accounts, the number would be Rs12,174 crore. This means that at a conservative estimate at least Rs1 lakh crore. 
 
Mr Goel, who devotes a great deal of time and effort to helping people, points out that, although RBI set up UDGAM (unclaimed deposits gateway to access information), a new portal to centralise streamline recovery of unclaimed deposits, this provides no information on inoperative accounts. (Read: RBI Launches UDGAM - Centralised Web Portal for Searching Unclaimed Deposits Across Banks).
 
UDAGM itself was only created after senior counsel Prashant Bhushan helped me file a petition in the Supreme Court (SC) on unclaimed money rightfully belonging to depositors lying unclaimed (Unclaimed Deposits: SC Allows Prashant Bhushan To File a Rejoinder on PIL Seeking Steps To Inform Legal Heirs). In response, RBI informed SC that it was setting up a centralised portal that has recently become operational. 
 
At an annual death rate of 0.7%, we have 90 lakh people passing away every year. RBI’s own data shows that 2.5 crore bank accounts become inoperative every year in PSBs alone. It would appear that most of the money lying in unclaimed accounts belongs to people who are dead or those who are denied their rights due to litigation that goes on for decades. The fact is that there has been no effort to provide access to this information, even to academics and data science experts, to find ways to return gigantic sums of money to the rightful owners. 
 
It is pertinent to mention that the late Arun Jaitley, as finance minister, was the first to draw attention to dormant funds lying with banks in his Budget speech of 2014. He had approved the setting up of a committee under the chairmanship of the deputy governor, RBI, to examine unclaimed amount remaining in PPF (public provident fund), post-office savings schemes, etc., and recommend how this amount can be used to protect and further the financial interest of the senior citizens. (Read: https://pib.gov.in/newsite/PrintRelease.aspx?relid=109290 ). 
 
It is strange that nothing further has happened in this regard, and we have had to move the SC with a public interest litigation (PIL) to draw attention to these dormant funds. Small efforts such as the ‘100 days 100 pays’ campaign to refund money have fetched only a small success, with just Rs 5,729 crore being returned (Read: Banks Transferred Unclaimed Deposits Worth Rs1.44 Lakh Crore to DEA Fund in 5 Years; Received Rs5,729 Crore for Refunding to Claimant-depositors: Govt). A lot more needs to be done, and it cannot stop with bank funds alone. 
 
With Mr Jaitley’s protégé Nirmala Sitharaman, as the finance minister, it would be only fitting that this government takes on the challenge of accounting for people’s privately earned income and returning it to their rightful owners before we head into the general elections.
 
This article has been extensively revised since data from 5 banks came in after the initial article was published.
 
Comments
prashantrane2000
4 months ago
I am MFD, in my experience even if I notify people about unclaimed money (dividend/redemption) there no urgency/ importance given by many clients. They just don't care...
r_ashok41
4 months ago
how to find out the details is there any portal
rmganatra
4 months ago
Shocking! RBI's circular óf Feb. 2009 on dormant accounts expects the bank officers to proactively search the account holders and facilitate the balance transfer. We have no clue whether this was done!

If banks are not required to update the RBI on the status of these, they will not collate. I hope RBI will take cognizance of your article and monitor their resolution.

Kudos for highlighting matter which touches common man!/
Kamal Garg
4 months ago
Whatever be the amount of unclaimed as well as inoperative bank accounts, the GoI should not be allowed to usurp this account holders' money by merging this amount into Consolidated Fund of India (CFI).
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