What happens if you forget to claim your fixed deposit proceeds after maturity? Explained

• The Reserve Bank of India (RBI) on July 5 has amended rules for overdue fixed deposits (FD) wherein if a depositor does not claim the proceeds after maturity, the bank will charge the lower interest rates applicable from savings rate or contracted interest.
• RBI classifies a deposit as unclaimed when the depositor doesn’t make any transaction in the account for 10 years or more.
• Reportedly, unclaimed deposits with banks have been growing every year.

It commonly happens that people do not share basic financial information with their close ones or family members. At times, because of an unfortunate event of a death, the family members are unaware of the financial details of the deceased person.

Besides, some of us fail to keep track of multiple bank accounts and fixed deposits (FD) in different banks as we move cities and jobs.

Such proceeds, which are not claimed by the depositor, are kept in Depositors Education and Awareness Fund (DEAF), formed by the Reserve Bank of India (RBI) in 2014. Deposits from all banks which are inoperative for at least 10 years are transferred into this large pool of unclaimed money.

Currently, there is a large amount of money lying unclaimed in such accounts. As of now, more than Rs 82,000 crore of investor wealth is lying unclaimed in forgotten and lost investments, as per ET Wealth estimates.

Do interest rates continue on the unclaimed proceeds?

Yes, these unclaimed funds will continue to earn interest rates specified by the RBI, and not the rate at which the deposit was made, which are called contracted rates.

The RBI has now tweaked rules for interest rates on unclaimed fixed deposits (FD), wherein if depositors forget to claim the proceeds after maturity, the amount left unclaimed will attract interest rate applicable to savings account or contracted rate whichever is lower.

Earlier, the interest rates on unclaimed amounts attracted the rate of interest as applicable to savings deposits.

This does not make a major difference as interest rates on savings accounts have been decreasing, which means it will always be lower than the contracted rate.

RBI classifies a deposit as unclaimed when a depositor doesn’t make any transaction in the account for 10 years or more.

The amendment comes when unclaimed deposits with banks have been reportedly growing every year.

What should you do to avoid missing such a maturity date?

Note down the maturity date of your FDs and share these details with your family. Do not forget to mention nominee details. If your home address happens to change, update your banks about the same.

It is convenient to collect all proceeds if you have a savings account with all banks you have FDs with. However, if not, remember to opt for an auto renewal option so that your FD is renewed for more years with the prevailing FD rate.

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