BANKING LAW

Depositor Education and Awareness Fund Scheme, 2014

The Reserve Bank of India released the guidelines on the criteria for registering institutions, organisations and associations for grant of financial assistance from the Depositor Education and Awareness Fund ("Fund"). All Banks need to deposit the amount with RBI under this scheme. But how much and from where they need to deposit is as below.

Ø  The amount to be credited to the Fund shall be the credit balance in any deposit account maintained with banks which have not been operated upon for ten years or more, or any amount remaining unclaimed for ten years or more.

Ø  It is clear that any amount lying with bank unclaimed will be credited to Depositor Education and Awareness Fund Scheme, 2014.

Accounts covered under Fund

• Savings bank deposit account
• fixed or term deposits
• cumulative/recurring deposit accounts
• current deposit accounts
• other form of deposit account in any form and with any name
• cash credit accounts
• loan accounts after due appropriation with banks
• margin money against issue of letter of Credit/Guarantee etc. or any security deposit
• outstanding telegraphic transfer
• DDs, pay orders, bankers cheques, sundry deposit account
• unadjusted NEFT credit balances or other such transactions
• unreconciled credit balances on account of ATM transactions
• undrawn balance in any prepaid card
• Any other amounts which may be specified by RBI from time to time.

So any type of balance which mentioned above idle for ten or more years with bank will be transferred to this scheme. Such collected amount will be invested by RBI and used for spreading the depositor education and awareness about dealing with such issues.

Important Highlights

Ø  Pursuant to the amendment of The Banking Laws (Amendment) Act, 2012, Section 26A has been inserted in the Banking Regulation Act, 1949 that empowers the Reserve Bank to establish Fund.

Ø   The Depositor Education and Awareness Fund Scheme, 2014 (Scheme) was notified in the Official Gazette on May 24, 2014.

Ø  The Scheme envisages registration of institutions, organisations or associations and grant of financial assistance to them for promotion of depositor's interests.

Ø  If you claim such unclaimed amount then bank have to give it back to customers. But customers will not get any interest from this scheme. So it is clear that RBI came with this idea to protect the depositors interest. Banks deposit this amount with RBI and in return RBI will take of such unclaimed amount.

 [This update is from Founding Partner Legal Imperials, Jyoti Srivastava Head Litigation Desk]