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Strengthening the Regulatory Framework for Unclaimed Deposits

DBOD.No. Leg.BC. 108/09.07.005/2011-12

June 6, 2012

All Scheduled Commercial Banks
(excluding RRBs)

Dear Sir

Strengthening the Regulatory Framework for Unclaimed Deposits

Please refer to paragraphs 102 and 103 of the Monetary Policy Statement for the year 2012-13, announced on April 17, 2012 proposing certain measures for strengthening the Regulatory Framework for Unclaimed Deposits.

2. In terms of our Circular DBOD.No.Leg.BC.34/09.07.005/2008-09 dated August 22, 2008 detailed instructions have been given to banks on dealing with unclaimed deposits/inoperative accounts. They have been advised to find the whereabouts of the customers and their legal heirs. These instructions, inter alia, include i) annual review of accounts in which there are no operations, ii) operations in such accounts to be allowed after due diligence, and iii) no charge to be levied for activation of inoperative accounts, etc.

3. Despite the above instructions, banks have not been pro-active in tracing customers linked with unclaimed deposits/inoperative accounts. Also, the need to identify the owners of these unclaimed deposits/inoperative accounts is closely linked to KYC due diligence. Therefore, in terms of our circular DBOD.No.Leg.BC.81 /09.07.005/2011-12 dated February 7, 2012 banks were advised that they should display the list of unclaimed deposits/inoperative accounts which are inactive/ inoperative for ten years or more on their respective websites by June 30, 2012. The list so displayed on the websites must contain only the names of the account holder(s) and his/her address in respect of unclaimed deposits/inoperative accounts, etc.

4. On a review, with a view to further strengthen the regulatory framework for inoperative accounts and unclaimed deposits, banks are advised to put in place a Board approved policy on classification of unclaimed deposits; grievance redressal mechanism for quick resolution of complaints; record keeping; and periodic review of such accounts.

5. The first periodic review of unclaimed deposits/inoperative accounts should be put up to their respective bank Boards by September 30, 2012.

Yours faithfully,

(Deepak Singhal)
Chief General Manager-In-Charge