Unclaimed Deposits Surge 2.5x: Identifying Banks with the Highest Holdings

Unclaimed deposits in India soared 2.5x post-Covid, reaching ₹42,000 crore. State Bank of India leads, followed by Punjab National Bank and ICICI Bank.

In the wake of the Covid-19 pandemic, unclaimed bank deposits in India have surged significantly, reaching 2.5 times their pre-pandemic levels by March 2023. The rise is attributed to various factors including inoperative accounts, unclaimed fixed deposits, and the unfortunate demise of depositors without proper nomination.

Unclaimed Deposits Statistics

As per Reserve Bank of India (RBI) data, unclaimed deposits with scheduled banks surpassed Rs 42,000 crore by March 2023. This sharp increase is evident from the Rs 18,379 crore reported in December 2019. Despite initiatives to raise public awareness and technological advancements, unclaimed funds held by both public and private sector banks alone amounted to Rs 42,270 crore.

Distribution among Banks

Public sector banks bear the brunt of unclaimed deposits, holding approximately 83% of the total, with State Bank of India leading the pack at Rs 8,609.40 crore. Punjab National Bank follows closely with Rs 5,298.80 crore in unclaimed deposits. Among private banks, ICICI Bank tops the list with Rs 1,074.40 crore, followed by HDFC Bank at Rs 446.8 crore.

Top 3 PSU Bank by amount of unclaimed deposits as on Dec 2022

Bank Name Amount Rs in Cr
SBI 8,609.40
PNB 5,298.80
Canara Bank 3,924

Top 3 Private Bank by amount of unclaimed deposits as on Dec 2022

Bank Name Amount Rs in Cr
ICICI Bank 1,074.40
HDFC Bank 446.8
IDBI 378.9

Reasons Driving the Rise

Several factors contribute to the escalation of unclaimed deposits. Customers often fail to close inactive accounts or lose track of them during relocations. The pandemic exacerbated the situation with a rise in accounts and deposits of deceased customers lacking proper nomination. Complicated documentation processes further deter claimants, especially legal heirs.

Efforts to Address the Issue

To streamline the process, RBI introduced the online portal UDGAM (Unclaimed Deposits-Gateway to Access Information) in 2023, enabling users to search for unclaimed deposits across multiple banks. Currently, 30 banks are part of UDGAM, hosting information on unclaimed funds. RBI has also mandated banks to conduct regular reviews of large unclaimed amounts and proactively reach out to customers.

Future Outlook

Leveraging technology, such as the Account Aggregator system, to connect all bank accounts to a central framework, thereby reducing unclaimed funds. With concerted efforts from regulators and banks alike, addressing the issue of unclaimed deposits can enhance financial transparency and empower depositors to claim what rightfully belongs to them.

Disclaimer: This post has been written exclusively for educational purposes. The securities
mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.