Section 26A of the Banking Regulation Act, 1949 - Depositor Education and Awareness Fund

Section 26A of the Banking Regulation Act, 1949 requires the Reserve Bank of India to maintain the Depositor Education and Awareness Fund, commonly called the DEA Fund. Broadly, amounts lying in accounts that have not been operated for ten years, and deposits or other amounts remaining unclaimed for more than ten years, are transferred to the Fund in accordance with the statutory provision and RBI framework. The depositor's right to claim the money does not end merely because the amount has been transferred to the Fund.

Contents

Meaning and purpose of Section 26A

Section 26A creates the statutory basis for the Depositor Education and Awareness Fund. It is intended to bring long-unclaimed banking amounts into a dedicated RBI-administered framework while preserving the rights of depositors and other lawful claimants.

  • Fund: The Reserve Bank establishes the Depositor Education and Awareness Fund.
  • Ten-year rule: Covered amounts are transferred after the statutory ten-year period, subject to the time and procedure prescribed under the law and RBI framework.
  • Claim survives: Transfer to the Fund does not extinguish the depositor's or claimant's right to seek repayment from the bank.
  • Bank repayment: The bank remains responsible for paying a valid claim and may thereafter seek reimbursement from the Fund in the prescribed manner.
  • Purpose: The Fund is used to promote depositors' interests and other purposes specified by RBI for that objective.

Section 26A - Establishment of Depositor Education and Awareness Fund

(1) The Reserve Bank shall establish a Fund to be called the "Depositor Education and Awareness Fund" (hereafter in this section referred to as the "Fund").

(2) There shall be credited to the Fund the amount to the credit of any account in India with a banking company which has not been operated upon for a period of ten years or any deposit or any amount remaining unclaimed for more than ten years, within a period of three months from the expiry of the said period of ten years:

Provided that nothing contained in this sub-section shall prevent a depositor or any other claimant to claim his deposit or unclaimed amount or operate his account or deposit account from or with the banking company after the expiry of said period of ten years and such banking company shall be liable to repay such deposit or amount at such rate of interest as may be specified by the Reserve Bank in this behalf.

(3) Where the banking company has paid outstanding amount referred to in sub-section (2) or allowed operation of such account or deposit, such banking company may apply for refund of such amount in such manner as may be specified by the authority or committee referred to in sub-section (5).

(4) The Fund shall be utilised for promotion of depositors' interests and for such other purposes which may be necessary for the promotion of depositors' interests as may be specified by the Reserve Bank from time to time.

(5) The Reserve Bank shall, by notification in the Official Gazette, specify an authority or committee, with such members as the Reserve Bank may appoint, to administer the Fund, and to maintain separate accounts and other relevant records in relation to the Fund in such forms as may be specified by the Reserve Bank.

(6) It shall be competent for the authority or committee appointed under sub-section (5) to spend moneys out of the Fund for carrying out the objects for which the Fund has been established.

Legislative note: Section 26A was inserted by Act 4 of 2013, section 8, with effect from 18 January 2013.

Legal effect and depositor rights

The important protection in sub-section (2) is that the transfer of money to the DEA Fund does not take away the right of a depositor or another lawful claimant. The claim continues to be made against the bank. If the bank pays the claimant or permits operation of the account in accordance with the applicable rules, it may seek refund from the DEA Fund under the prescribed process.

The RBI's Depositor Education and Awareness Fund Scheme, 2014 provides the administrative framework for the Fund, including its management, accounting and use for depositor education, awareness and protection-related purposes.

Interest on unclaimed interest-bearing deposits transferred to the DEA Fund

Under the RBI circular dated 11 May 2021, banks are required to calculate interest on eligible interest-bearing deposits transferred to the DEA Fund at the historical rates specified by RBI: 4% per annum up to 30 June 2018, 3.5% per annum from 1 July 2018 to 10 May 2021, and 3% simple interest per annum from 11 May 2021 until payment to the depositor or claimant.

Practical point: The customer does not claim the deposit directly from the DEA Fund. A valid claim is made with the respective bank, which settles the claim under the applicable RBI instructions.

How to search and claim an unclaimed deposit

RBI provides the UDGAM portal to help registered users search for unclaimed deposits or accounts across participating banks. The portal is a search facility; it does not itself settle or pay the claim.

  1. Search the relevant unclaimed deposit or account through the bank's website or the RBI UDGAM portal.
  2. Note the available reference details and the bank shown in the search result.
  3. Approach the concerned bank and follow its claim or account-reactivation procedure.
  4. Provide identity, account, succession, nomination or other supporting documents, as applicable to the nature of the claim.
  5. The bank verifies and settles the valid claim according to RBI instructions and its prescribed process.

Official legal and RBI resources

For the current statutory text and regulatory framework, refer to the official sources below:

This article is intended as a legal information resource. For a specific claim, succession issue or dispute with a bank, the applicable RBI instructions and the facts of the individual account should be checked.