What changed
The RBI reviewed and lowered the interest rate on unclaimed interest-bearing deposits transferred to the Depositor Education and Awareness (DEA) Fund. Effective May 11, 2021, the rate is 3% simple interest per annum, down from the previous 3.5% that applied from July 1, 2018 to May 10, 2021.
What it means for you
Banks will now pay a lower interest rate (3%) on unclaimed deposits when depositors or claimants come forward. This reduces the cost for banks on funds held in the DEA Fund, but also means depositors receive less compensation for delayed claims. The change aligns with the RBI's periodic review of these rates.
What you must do
- Update your systems to apply 3% simple interest per annum on all unclaimed interest-bearing deposits transferred to the DEA Fund from May 11, 2021 onwards.
- Ensure that for claims made after May 11, 2021, the interest calculation uses 4% for periods up to June 30, 2018, 3.5% from July 1, 2018 to May 10, 2021, and 3% from May 11, 2021 until payment.
- Communicate the revised interest rate to relevant internal teams handling unclaimed deposits and DEA Fund transfers.
Who it affects
All Scheduled Commercial Banks (including RRBs), Local Area Banks (LABs), Urban Co-operative Banks, State Co-operative Banks, District Central Co-operative Banks, Small Finance Banks, Payments Banks
What is the new interest rate on unclaimed deposits transferred to the DEA Fund?
Effective May 11, 2021, the rate is 3% simple interest per annum, reduced from the earlier 3.5%.
How should banks calculate interest for claims made after May 11, 2021?
Use 4% p.a. for the period up to June 30, 2018, 3.5% from July 1, 2018 to May 10, 2021, and 3% from May 11, 2021 until the date of payment.
Does this circular change any other aspects of the DEA Fund scheme?
No, only the interest rate has been revised. All other provisions of the June 26, 2014 circular remain unchanged.