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Unclaimed FDs: Here’s what you should know


NEW DELHI: Unclaimed deposits are quite common. People often do not share crucial financial information with their families, including details about their accounts and deposits. After their death, family members are unaware of the deceased‘ investments and financial information. Besides, many depositors fail to keep track of accounts and deposits for different reasons (job changes, multiple accounts, etc.). The unused savings bank accounts turn into dormant accounts. They can be made active again after following the rules prescribed by the Reserve Bank of India (RBI). The proceeds of a dormant fixed deposit move into the linked saving bank account. When such proceeds are not claimed for ten years, the funds are transferred to the Depositors Education and Awareness Fund (DEAF), maintained by the RBI.

What do the rules say?

According to RBI guidelines, savings and current bank accounts should be treated as inoperative/dormant if no transactions are done in the account for over two years. For term deposits, the two years shall be calculated after the date of maturity.

Suppose the customer has mandated that the interest on FDs be credited into the savings account, in that case, the account will be treated as operative until the interest is credited to the savings bank account. The account will become inoperative two years after the FD’s last credit entry is made, and further, no transaction occurs.

The savings bank account will continue to earn interest whether the account is operative or not. If an FD matures and proceeds are unpaid or remain unclaimed, the amount left unclaimed with the bank attracts a savings bank interest rate.

Further, the bank may try to contact you for further action. Besides, if the mandate of auto-renewal has been provided, the FD will renew as per the applicable FD rate.

What are unclaimed deposits?

“As per the Reserve Bank of India, unclaimed deposits are those deposits in savings, current accounts or term deposits that are not claimed within ten years from their maturity date,” says Adhil Shetty, CEO of “After 10 years, the unclaimed funds are transferred to Depositor Education and Awareness (DEA) Fund managed by the RBI.”

The depositor, if alive, is still entitled to claim the deposits later from their bank along with interest. If the depositor is not alive, their legal heir can claim the unclaimed deposits after meeting certain conditions prescribed by RBI. The process, however, is cumbersome and takes a lot of time—especially if the accounts are not nominated. So it is better to either take an action when FD matures or put it in auto-renewal mode.

“It becomes important for the depositor to keep track of their bank accounts, ensure proper nomination of all accounts, and close surplus accounts not being regularly used. The most important thing is to inform a trusted person such as the spouse of the existence of these accounts so that they’re not in the dark about one’s finances,” adds Shetty.

Your fixed deposits shall earn interest as applicable to the savings bank (SB) account or the contracted interest rate on the matured TD, depending on which is lower. Banks, therefore, have two benchmarks to choose from while paying interest on unpaid deposits: the savings bank account interest rate and the rate at which the term deposit was opened. In some cases, the interest rate for short-term fixed deposits, typically those less than 90 days, have an interest rate lower than the SB rates. Such term deposits may continue to earn only the lower rate, not the savings interest rates.

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