RBI Issues Circular On Levying Unfair Interest Charges On Customers

Finance minister Nirmala Sitharaman

Union finance minister Nirmala Sitharaman has red flagged the mountain of unclaimed deposits lying with banks, financial institutions and insurance companies, urging the regulators in different sectors to expedite their settlement, especially in cases where the details of the nominees are available. The finance minister nudged for a special drive during the first meeting of the Financial Stability and Development Council after the Union budget for 2023-24.

While emphasising the need to deliver the financial assets where they are due, Sitharaman also underscored the need for early warning indicators of stress in the economy that would allow policymakers to shape appropriate response early to minimise adverse economic impact.

Describing financial stability as their “shared responsibility”, the FM emphasised the need for regulators to scan the environment continuously to spot early warning signals to adopt timely measures.

Trouble shooting
She emphasised that the need to detect impending trouble spots has become all the more important in view of the global turmoil in order to keep the Indian canvas well-protected and well-regulated.

In order to find a solution to the piling up of unclaimed financial assets across the entire spectrum such as amounts lying idly in savings accounts, FDs, insurance companies, shares and dividends, mutual funds, Sitharaman said that a special drive must be undertaken to deliver the assets to the hands where they are due.

Rs 35k cr with RBI
Unclaimed deposits with only PSU banks have piled up the financial system to such an extent that unclaimed deposits transferred to the RBI in February this year went up to Rs 35,012 crore. These amounts were lying in assets that were not operated upon for more than a decade.

In another estimate the amounts lying in unclaimed policies only with the LIC stood at Rs 21,539 crore in September 2021.
It is a common lapse for investors to forget about their assets and not inform their family members and/or nominees about such assets. It is often seen that when they expire, their nominees are often left in the dark about the existence of the assets which, therefore, remain unclaimed. Nowadays often nominees or heirs move to different countries to pursue careers and it sometimes becomes difficult for them to claim and do the paperwork even if they have an idea of the assets they have inherited.

In her budget speech Sitharaman had mentioned that an IT portal could be set up for investors to tap unclaimed deposits lying with various institutions.

Chaired by the FM, Monday’s meeting was attended by all the crucial persons of the financial spectrum including the RBI governor, chairpersons of IRDA, PFRDA and Sebi, chairmen of the Insolvency and Bankruptcy Board of India and the International Financial Services Centres Authority.