Sitharaman calls for special drive for settlement of unclaimed bank deposits

Finance Minister Nirmala Sitharaman on Monday asked financial sector regulators, including the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), to launch a special drive to help people get their unclaimed deposits in banks and other financial institutions.

“Regulators should conduct a special drive to facilitate the settlement of unclaimed deposits and claims in the financial sector across all segments, such as banking deposits, shares and dividends, mutual funds, insurance, etc,” Sitharaman said while addressing the meeting of the Financial Stability and Development Council (FSDC).

RBI Governor Shaktikanta Das, SEBI Chairperson Madhabi Puri Buch, Insurance Regulatory and Development Authority of India (IRDAI) Chairman Debasish Panda and Pension Fund Regulatory and Development Authority (PFRDA) Chairman Deepak Mohanty were present in the meeting.

Also Read | Indian financial system well protected, regulated: Economic Affairs Secretary Ajay Seth

A deposit is considered to be unclaimed if there is no activity on it for 10 years or more.

As at the end of February 2023, the total amount of unclaimed deposits transferred to RBI by Public Sector Banks (PSBs) in respect of deposits which have not been operated for 10 years or more, was Rs 35,012 crore, the government informed the parliament last month.

During the meeting, Sitharaman asked the financial regulators to adopt a focused approach to reduce the compliance burden and ensure a streamlined and efficient regulatory environment.

The progress achieved in this regard shall be reviewed by the Union Finance Minister with each regulator in June 2023, according to an official statement released after the meeting.

“Union budget has announced that a system will be put in place where the unclaimed deposits, shares and dividends can be reclaimed by the investors, depositors or nominees. We have several cases where nominees’ details are available but they haven’t come forward,” Economic Affairs Secretary Ajay Seth told reporters after the meeting.

Seth said the FSDC agreed for the need of running a special drive to help people get their unclaimed deposits.

“The council discussed in what manner the KYC process needs to be simplified and streamlined,” he added.

On the impact of the failure of some American and European banks, Seth said the Indian financial system is well protected and there is no spillover effect.

“The council discussed several issues including financial stability noting that there are daunting challenges coming from the global economy,” said Seth.

The council also deliberated on “early warning indicators” for the economy and the preparedness to deal with them. “Regulators must take appropriate and timely action to mitigate any vulnerability and strengthen financial stability,” Sitharaman highlighted in the meeting as per the official statement.