My Little Success Story with RBI

[sidmis]

This is a little success story I want to share with the forum members.

For the last one year I have been trying to unravel the mystery behind the huge amount of money lying with the Indian Banking System in the shape of Dormant/Inoperative accounts. These money legitimately belong to the owners/heirs of the account holders and not to the Banks.

Large nos. of accounts are lying around and Banks are coolly enjoying the funds without paying any interest on it and doing nothing on it.

I discovered that thousands of crores of money in more than half a lakh accounts are lying in the Banks depriving the legitimate owners of this funds. This is AS per figures supplied to me by RBI. Perhaps this was first time some one asked for these information and it took RBI 2 months to collect & supply these information. (Free of cost)

One June 23 I filed another RTI application to know what the Govt. is doing on this.


I posed three queries to the Ministry of Finance.

1. Kindly let me know the various steps & instructions made by the Finance Ministry with regard to money lying with all Banks operating in India as Dormant / Silent / Inoperative accounts?
2. What steps are being taken by the Govt. / Ministry to return the money to their legitimate owners / heirs / claimants etc.
3. Copy of circulars / memos / instructions / office orders etc. with respect to above may be supplied to me.

The PIO of FinMin resorted to 6(3) & transferred it.

After much traveling my RTI application finally landed with the RBI and RBI after 22 days of receiving my RTI Application issued a notification with a slew of instructions to the Banks on how the accounts and funds in these Dormant & Inoperative a/cs shall be managed.

Today I received the official reply from the CPIO, RBI. And once again it was all free since the RBI has exceeded the 30 days deadline.

The said circular and the corresponding News articles are available here.

Please note that the following circular was non existant at the time of filing my RTI application i.e. on 23rd June 2008.

Unclaimed Deposits / Inoperative Accounts in banks

News Reports:
The Hindu : Business : Customers to get interest on inoperative accounts

The Telegraph - Calcutta (Kolkata) | Business | Prop for dormant bank accounts

[ganpat1956]

Good work Sidharth. Like the dormant accounts in banks, the LIC is holding thousands of crores of unclaimed premium remittance of deceased persons. Years ago I had come across an article in one of the news papers about this, though I dont remember the full details at this point of time. Let us do something about these as well.

[sidmis]

Thanks Ganpat & Kushal.

Regarding LIC, I have heard about it. Since I was preoccupied with this dormant account issue, I could not find time for the same. Now it's time to look into that too as suggested by you.

Btw I have posted the main replies of RBI for members to see.

CPIO_RBI_Reply_ON_Dormant_Accounts_1

CPIO_RBI_Reply_ON_Dormant_Accounts_2


There are several other documents as mentioned in the reply. They are all available at RBI Website. So I am not posting them here.

[jps50]

Thanks a lot for the perseverence and efforts in public interest. However, circular from RBI is first step. We have to see what is done at the branch level. My 31 year experience in bank shows that H.O. reiterates RBI circulars and branches just file it out. They do not have time even to follow up loan defaulters, they will not follow dormant deposit account holders. After a month or two we can ask for action taken report for few main branches of some banks in the country and just activate ground zero. I will try few bank branches.

[sidmis]

However, circular from RBI is first step. We have to see what is done at the branch level.

Thanks JPS. You are absolutely right on that.

RBI circular is a begining. This issue should be pursued at various level. I think there are many more RTIs left to be filed in the coming months to see the results.

I will try few bank branches.

First start from the state level & then come down to branch level.

[karira]

That is a very good effort Sidharth !
Keep it up.

[The Great]

Sidharth, the same thing is with the Postal Deposit also. whether the RBI circular is applicable for Postal Department?

[sidmis]

Sidharth, the same thing is with the Postal Deposit also. whether the RBI circular is applicable for Postal Department?

I don't think so. Postal dept. have their separate rules for Savings and other accounts.

This is a news to me and worth pursuing further.

[chaglasmc]

Sidharth - This is very inspiring...keep the good work going.
If possible, we should have a folder within this website to refer to the RTI success stories, esp. the ones that have a wider appeal/impact.

[ganpat1956]

Originally Posted by chaglasmc

If possible, we should have a folder within this website to refer to the RTI success stories, esp. the ones that have a wider appeal/impact.

We already have a separate section RTI Community Lounge - Success Stories at rtiindia.org and this very thread has been filed only under that.

[karira]

As reported by PTI in business-standard.com on 11 September 2008:
Banks sitting on Rs 1,200 cr in idle a/c

Banks sitting on Rs 1,200 cr in idle a/c

Commercial banks in the country are sitting on funds of over Rs 1,200 crore lying idle in about two crore accounts for the past 10 years.

This is despite a circular issued by the Reserve Bank of India in November 1989 instructing banks to trace customers or legal heirs of the unclaimed accounts. The disclosure was made in reply to an RTI plea filed by Sidharth Misra, a resident of Cuttack, Orissa.

The reply said that an amount of Rs 1207,35,54,334.23 is lying idle with banks across India. This unclaimed amount belongs to 1,74,38,100 account-holders. According to the RBI reply, the quantum of unclaimed deposit is highest in the rural regional banks. It comes to Rs 1156,98,70,277.68.

“The banks take this order in letter, not in spirit, and wash their hands off by sending a simple letter to the account-holder,” an RBI official said on the condition of anonymity.

Misra, who said he had filed the RTI after many widows in Cuttack had complained that the banks were reluctant to give them their rightful dues, said, “This huge quantum of money is lying idle with the banks and will remain idle in the near future because the right heir to this money is not aware of it,” Misra said.

Nationalised banks account for the highest unclaimed amount, totalling Rs 794,17,41,124.18. The number of idle accounts in these banks in the past 10 years is 72,45,581.

“The bank should take serious note of these account-holders who do not fill up the nominee category in the bank forms. Despite rules which make it compulsory to fill the nominee form, many banks do not insist and then, when the account holder disappears/dies, the money stays with the bank for an indefinite period,” Misra reasons. The data given by RBI enumerates 10 years starting from the year 1996-2006.

“Claiming such money is a tedious task. There are a lot of procedures and formalities such as proving identity and sifting through old data which deters the genuine claimant of her/his legitimate money.

“Moreover, if the amount is equal to the fine charged by the bank, there is no point claiming such money,” a senior bank official said.

[rajub]

Our member friend Sidmis has achieved major success in seeking information under RTI.

It is big issue, so big that atleast five news portals have given prominant place to the news.

The success is mainly due to RTI Act. But more due to perseverence and hard work put in by Sidmis.

I am proud of being member friend of him as he has done it without having any personal gain at stake.

Well done Sidmis ! Please keep it up.

rajub

The news links are given below:

http://www.livemint.com/2008/09/10155128/Banks-sitting-on-Rs1200-cr-ly.html
http://www.financialexpress.com/news/Banks-sitting-on-Rs-1-200-cr-lying-in-idle-accounts/359713/
http://www.businessworld.in/index.php/Economy-and-Banking/Banks-Sitting-On-Rs-1200-Cr.html
http://www.hindu.com/thehindu/holnus/006200809101660.htm
http://www.thehindubusinessline.com/blnus/17101620.htm

[karira]

Raju,

The links given are not opening correctly (they open the rediff page).
Can you please post the correct links.

[sidmis]

Thanks Raju for your kind words.

Happy to see you active again in this forum.

Actually the figures in all these news clips are grossly under reported.

The links given are not opening correctly (they open the rediff page).

Karira, These links posted by Raju are opening properly. I find no problem there. Though it's taking extra time to resolve.

Sidharth

[chaglasmc]

Clicking on the links(hyper links) take us to rediff page, copying the links in a new browser works. Anyways here are the same links again..clicking these should open the correct page

Banks sitting on Rs1,200 cr lying in idle accounts - Money Matters - livemint.com
Banks sitting on Rs 1,200 cr lying in idle accounts - The Financial Express
Businessworld - Banks Sitting On Rs 1,200 Cr...
The Hindu News Update Service
The Hindu Business Line : Banks sitting on Rs 1,200 crore lying in idle accounts

[sidmis]

Dear Chagla S.M.C.,

Thanks for posting the links once again. Hope one of the above link should open properly.
All of them are pretty similar though.

[prbhat_gen]

sidhartha,

the attached pic was published in our local news paper (Amar Ujala) on 11/09/2008.

it was also published in Danik Jagran but the copy is not traceble to me. soon i find the copy of Danik Jagran i will upload it also.

[Ralph Frammolino]

This is a very inspiring story! May I contact you further on this? I'm a visiting professor at the Indian Institute of Journalism & New Media and will be on a panel next Saturday to discuss the RTI. Thanks....