RBI asks banks to be cautious on inoperative account payments-Business Standard-23.11.2014
Also asked banks to carry out proper due diligence in accordance with risk category of the customers
The Reserve Bank has asked banks to exercise caution before making payments to customers claiming funds lying idle in inoperative accounts.
"Banks are advised to invariably verify the genuineness of the transactions and ensure that the amounts paid to the customers are properly audited by the internal auditors / statutory auditors," RBI said in a communique to banks.
It also asked banks to carry out proper due diligence in accordance with risk category of the customers before making any such payments.
The RBI directive came in the wake of rising cases where banks claimed substantial refunds from the Depositor Education and Awareness Fund, soon after transferring the amounts in the fund.
RBI said it was not clear as to how the customers or claimants, who did not operate the account for ten years or more, approached the banks for repayment immediately after the balances in their inoperative accounts were transferred to the fund.
"Banks should, therefore, follow all instructions meticulously in respect of inoperative accounts," RBI said.
As per the RBI directive, banks have been advised to carry out special efforts to trace the customers in respect of inoperative accounts.
As per the RBI guidelines, banks are required to pay back the amounts laying in inoperative accounts for ten years or more, along with interest.
They later can lodge a claim for refund from the Depositor Education and Awareness Fund for an equivalent amount paid to the customer/depositor.
"Banks are advised to invariably verify the genuineness of the transactions and ensure that the amounts paid to the customers are properly audited by the internal auditors / statutory auditors," RBI said in a communique to banks.
It also asked banks to carry out proper due diligence in accordance with risk category of the customers before making any such payments.
The RBI directive came in the wake of rising cases where banks claimed substantial refunds from the Depositor Education and Awareness Fund, soon after transferring the amounts in the fund.
RBI said it was not clear as to how the customers or claimants, who did not operate the account for ten years or more, approached the banks for repayment immediately after the balances in their inoperative accounts were transferred to the fund.
"Banks should, therefore, follow all instructions meticulously in respect of inoperative accounts," RBI said.
As per the RBI directive, banks have been advised to carry out special efforts to trace the customers in respect of inoperative accounts.
As per the RBI guidelines, banks are required to pay back the amounts laying in inoperative accounts for ten years or more, along with interest.
They later can lodge a claim for refund from the Depositor Education and Awareness Fund for an equivalent amount paid to the customer/depositor.
PF chief wants policy on inoperative accounts
EPFO had Rs 26,497 crore in "inoperative accounts" as of March 2013
Central provident fund commissioner K K Jalan wants a policy on inoperative accounts in the Employees Provident Fund Organisation (EPFO).
He told Business Standard, "In every pension fund body, some amount always remains unclaimed. There should be a policy on that.”
EPFO had Rs 26,497 crore in “inoperative accounts” as of March 2013, minister of state for labour and employment Vishnu Deo Sai said in a written reply in the Lok Sabha recently. Jalan cited international practices, such as the one followed in Malaysia where the pension funds go into a separate government account if it is unclaimed till 80 years of age of a citizen.
“The unclaimed funds there are parked in a separate government account and hence the cash goes to the government. That means this will become public exchequer money and no longer be a part of the pension funds. So, at the time of claiming, the person can go to the government,” Jalan said.
In Malaysia, after a person reaches 80 years, the contributions get transferred to the Registrar of Unclaimed Moneys, required under the Employees Provident Fund Act of 1991 in that country.
Finance Minister Arun Jaitley has already announced a committee to look into utilisation of unclaimed funds in various bodies like the public provident fund (PPF) and post office savings schemes. In his Budget speech, he'd said the committee would give its report by December. on how the money in these accounts can be utilised to protest the “financial interest of senior citizens”.
Experts welcomed this move. “If a person dies, the family may never know that the deceased even had a PPF account, so the funds become inoperative. There might also be cases where there is no nomination as well,” said a senior analyst from Deloitte Haskins & Sells.
However, inoperative funds in the EPFO do not get classifies as unclaimed. EPFO says there are “definite claimants” and the amount “cannot be utilised for any other schemes except for the settlement of the members’ account", Sai had said in the reply. Jalan said introduction of the double-entry accounting system will help EPFO identify the inoperative account balances in a more efficient manner.
“The pilot of double-entry accounting will begin this year and might be launched by next year,” he said.
Under this system, the assets and liabilities of a firm are specifically available, unlike in the single-entry system.
He told Business Standard, "In every pension fund body, some amount always remains unclaimed. There should be a policy on that.”
EPFO had Rs 26,497 crore in “inoperative accounts” as of March 2013, minister of state for labour and employment Vishnu Deo Sai said in a written reply in the Lok Sabha recently. Jalan cited international practices, such as the one followed in Malaysia where the pension funds go into a separate government account if it is unclaimed till 80 years of age of a citizen.
“The unclaimed funds there are parked in a separate government account and hence the cash goes to the government. That means this will become public exchequer money and no longer be a part of the pension funds. So, at the time of claiming, the person can go to the government,” Jalan said.
In Malaysia, after a person reaches 80 years, the contributions get transferred to the Registrar of Unclaimed Moneys, required under the Employees Provident Fund Act of 1991 in that country.
Finance Minister Arun Jaitley has already announced a committee to look into utilisation of unclaimed funds in various bodies like the public provident fund (PPF) and post office savings schemes. In his Budget speech, he'd said the committee would give its report by December. on how the money in these accounts can be utilised to protest the “financial interest of senior citizens”.
Experts welcomed this move. “If a person dies, the family may never know that the deceased even had a PPF account, so the funds become inoperative. There might also be cases where there is no nomination as well,” said a senior analyst from Deloitte Haskins & Sells.
However, inoperative funds in the EPFO do not get classifies as unclaimed. EPFO says there are “definite claimants” and the amount “cannot be utilised for any other schemes except for the settlement of the members’ account", Sai had said in the reply. Jalan said introduction of the double-entry accounting system will help EPFO identify the inoperative account balances in a more efficient manner.
“The pilot of double-entry accounting will begin this year and might be launched by next year,” he said.
Under this system, the assets and liabilities of a firm are specifically available, unlike in the single-entry system.
RBI asks rural banks to partially freeze KYC non-compliant a/c
Similar instructions were issued to commercial banks by RBI last month
The RBI has directed regional rural and central cooperative banks to partially freeze bank accounts of those customers who have not complied with the Know Your Customer (KYC) norms.
Similar instructions were issued to commercial banks by RBI last month.
"Banks may impose partial freezing by allowing all credits and disallowing all debits with the freedom to close the accounts.
"If the accounts are still KYC non-compliant after six months of imposing initial partial freezing, banks may disallow all debits and credits from/to the accounts, rendering them inoperative," RBI said in a directive to the banks.
RBI said banks will be free to take decision on closing of accounts of such customers.
While imposing 'partial freezing', RBI said banks are advised to ensure that the option is exercised after giving due notice of three months initially to the customers and followed by a reminder for further period of three months.
Meanwhile, the account holders can revive accounts by submitting the KYC documents as per instructions in force.
The RBI notification also said banks need not seek fresh proofs of identity and address at the time of periodic updation, from those customers who are categorised as 'low risk', in case of no change in status with respect to their identities and addresses.
"A self-certification by the customer to that effect should suffice in such cases," it said, adding that in case of change of address of such 'low risk' customers, they could merely forward a certified copy of the document by mail/post.
Further, RBI also asked them not to insist on physical presence of such low risk customer at the time of periodic updation, the RBI said
Similar instructions were issued to commercial banks by RBI last month.
"Banks may impose partial freezing by allowing all credits and disallowing all debits with the freedom to close the accounts.
"If the accounts are still KYC non-compliant after six months of imposing initial partial freezing, banks may disallow all debits and credits from/to the accounts, rendering them inoperative," RBI said in a directive to the banks.
RBI said banks will be free to take decision on closing of accounts of such customers.
While imposing 'partial freezing', RBI said banks are advised to ensure that the option is exercised after giving due notice of three months initially to the customers and followed by a reminder for further period of three months.
Meanwhile, the account holders can revive accounts by submitting the KYC documents as per instructions in force.
The RBI notification also said banks need not seek fresh proofs of identity and address at the time of periodic updation, from those customers who are categorised as 'low risk', in case of no change in status with respect to their identities and addresses.
"A self-certification by the customer to that effect should suffice in such cases," it said, adding that in case of change of address of such 'low risk' customers, they could merely forward a certified copy of the document by mail/post.
Further, RBI also asked them not to insist on physical presence of such low risk customer at the time of periodic updation, the RBI said
No serious efforts to revive loss making PSUs’-Hindu Business Line
Hyderabad, Nov. 23:
The Joint Forum of Officers’ Organisations of Public Sector Undertakings today said that there is no serious effort on the part of the Government to revive loss making units.
While the Government is squeezing the public sector though various instruments like advance dividends, administered prices, social subsidies, the Government is not doing much to revive loss making units, the forum said.
Earlier during the meeting hosted by the Officers Associations of the Public Sector Banks, All India Power Engineers Federation, National Confederation of Officers Associations, Sanchar Nigam Executives Association and MTNL Executives Association had met in New Delhi and reviewed the situation and decided to take up their concerns.
According to the Joint action Committee, the losses are either due to legacy of private sector or the undertakings have been driven sick due to the wrong policies of the Government. It felt that the political and economic situation in the country is not favourable to the interest of the employees serving the public-owned enterprises.
Therefore, the coordination committee has initiated steps for a bigger struggle against the policies of the Government which have caused tough times for pubic undertakings. Unmindful of the problems, the Government is bent upon selling the public sector units to private companies, they felt.
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