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Depositor Education and Awareness Fund: All You Need To Know

By Chanel Rick - Aug 4,2022
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So, when was the last time you forgot something? That memory or information will not re-surface anytime soon. No matter how hectic your schedule may be, our minds are constantly addressing and adding new information. Naturally, this new data usurp the spot of pre-existing knowledge. From slipping off your mind or completely forgetting about it – there’s no telling how long this information will remain forgotten. 

Most people experience common incidences like forgetting keys, wallets, cheques, pens, etc. But what about their savings accounts? Or perhaps a fixed deposit that hit maturity a while ago? It might have come as a shock. After all, who forgets about money? The recent pandemic made people realise how poorly their emergency corpus was funded. 

Despite all those hard money lessons learned, there’s a massive number of investment accounts that remain forgotten. Learn more about these inoperative accounts and how the Reserve Bank of India (RBI) demands they’re treated. 

The Purpose of DEA Funds in India 

There are several reasons behind the growing number of inoperative accounts in India. Some of these include situations like the account holder’s death, neglect of accounts with fewer funds, or failure to close accounts. 

To remedy this problem, the RBI has decided to transfer the funds of such accounts to the Depositor Education and Awareness Fund (DEAF). The RBI classifies deposits as unclaimed if the holder hasn’t made any transaction in the account for over ten years. That said, they can still reclaim the deposits from their bank along with the interest owed. 

The following statement was made by Yogesh Dayal, chief general manager of RBI. 

The growing volume of unclaimed deposits arise mainly due to non-closure of savings/current accounts which depositors do not intend to operate anymore or due to not submitting redemption claims with banks for matured fixed deposits. There are also cases of accounts belonging to deceased depositors, where the nominees/legal heirs do not come forward to make a claim on the bank(s) concerned.” 

If nominees or legal heirs of deceased depositors have identified such accounts, they can make claims on their behalf. And, if they suspect missing accounts, anybody can look up the list of unclaimed deposits posted on the government’s website. 

Recent RBI DEAF Campaigns – 2022 

With rising reports of increased unclaimed deposits, the RBI has launched a nationwide campaign to address these problems. It focuses on eight states that have reported the maximum number of unclaimed deposits or accounts. The campaign will use the native language of these states, along with English and Hindi. 

According to the central bank reports, unclaimed deposits in banks have increased to ₹48,262 Crores in FY22. Previously, these figures were ₹39,264 Crores in the preceding fiscal. An RBI official said these funds were found in banks across Punjab, Gujarat, Maharashtra, Bengal, Tamil Nadu, Karnataka, Bihar, and Telangana.

The RBI has jointly worked on this awareness campaign with veteran actor Amitabh Bachchan. Together, they encourage people to retrieve their unclaimed deposits from banks. Surprisingly, despite these attempts, the number of forgotten accounts has continued to grow. 

Things to Know Before Claiming DEAF Refunds 

Fortunately, once these unclaimed funds are transferred to the DEAF, the account holders or their heirs can still receive a complete refund. Banks will require them to adhere to specific mandatory processes to verify their identities and the authenticity of their claims. 

Holders or their heirs must visit the respective bank branch and avail of the DEAF form or download it from the bank’s website. However, heirs must provide the bank with the primary account holder’s death certificate and the form. Once the bank approves the details, heirs can convert the forgotten account into a regular one and activate transaction facilities. 

In some cases, the depositor with an unclaimed balance or fixed deposit in DEAF can demand that the bank repay the amount with interest. The banks will likely comply if interest is applicable for those accounts. Once these procedures begin, the bank can file a claim for a refund from the DEAF to repay the amount owed to their customer. 

For more details, here’s a general walk-through of how depositors can reclaim old accounts.

● Account holders must visit the respective bank and submit an Unclaimed Deposits Claim Form. 

● They must additionally attach the requested KYC details to serve as proof of the account and the amount claimed 

● Post verification, the bank will transfer the amount to their customer and proceed with a refund from the RBI for the same amount

● RBI will determine the rate of interest applicable for accounts that will receive a refund of the deposited amount along with interest accrued

● Depositors have the option to only partially claim the amount to revive the account and make it operative. 

But, wait, what about if your bank is undergoing liquidation? You can submit the claim form to the liquidator as a customer. If these unclaimed deposits are covered under DICGC Insurance, DEAF will pay the unclaimed amount to the liquidator. However, even without DICFC coverage, DEAF will reimburse the liquidator the amount paid to the customer. 

While financial advisors and blogs preach the importance of estate planning, some people might decide to skip out on certain aspects of it. Sometimes, they forget to include all their accounts. Other times, people entertain many lucrative offers for savings accounts and deposits – eventually forgetting about some of them. 

So, next time onwards, note down all the information of your existing accounts and run it by your nominee, too! Or else, there’s a high chance it could land in the DEAF. But, there’s no limit to the number of high-interest accounts or investments you can have – apply for a fixed deposit on Bajaj MARKETS today!

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