Interest on Claims in Depositor Education Fund Only From Date of Account Transfer: RBI

Interest on unclaimed deposits with banks will be payable only from the day they are transferred to a newly set up fund for educating depositors, the Reserve Bank of India (RBI) has said.

Earlier in May, the RBI had asked banks to remit deposits classified as unclaimed to the Depositor Education and Awareness Fund (DEAF) by June 30, 2014.

"The interest payable, if any, from the Fund on a claim shall accrue only from the date on which the balance in an account was transferred to the Fund till the date of payment to the customer/depositor," the RBI said in a clarification on Wednesday.

Further, it said that interest, if any, would be payable only on interest bearing deposits. And no interest shall be payable in cases of amounts refunded from the fund where no interest was payable by the bank to its customer.

The DEAF was first announced in the annual monetary policy by the RBI in May, 2013, with a view to use unclaimed deposits with banks for depositor education and awareness.

An unclaimed deposit is one wherein an account is not operated for 10 years or refers to any deposit or any amount remaining unclaimed for more than 10 years.

The RBI asked the banks to transfer the money using electronic form only and also laid out a detailed procedure for transfer of the money.

The apex bank in its directive has also asked banks to calculate cumulative balances in all such accounts with unclaimed deposits, along with interest accrued till May 23, 2014, and transfer them to the newly-created fund.