Have you ever wondered what happens to your bank savings accounts or fixed deposits if you don’t touch them for a long time? Maybe you’ve opened an account, used it for a while, and then forgotten about it. How long will banks hold onto these accounts, and where does the money go if left unclaimed?

How Long Do Banks Retain Unclaimed Savings Accounts and Deposits?

Banks generally hold unclaimed accounts for up to 10 years. During this time, they may reach out to account holders to remind them of inactive accounts. However, if the account or deposit remains untouched, it eventually gets moved to a government-regulated fund.

  • Savings accounts become dormant if not used for a certain period, often after 24 months of inactivity.
  • Fixed deposits (FDs) and other deposits also fall under this rule if they aren’t renewed or claimed post-maturity.

What Happens If You Don’t Claim Your Fixed Deposit After Maturity?

If you have a fixed deposit that reaches maturity and isn’t auto-renewed or withdrawn, what happens? Here’s what you need to know:

  • Banks may continue to hold the FD at the savings account interest rate or the FD rate, whichever is lower, as per RBI’s 2021 guidelines.
  • In many cases, this means the funds will likely earn only the lower savings interest rate until claimed.

Where Do Unclaimed Funds Go After 10 Years?

When accounts or deposits are left unclaimed for 10 years, they’re transferred to the Depositor Education and Awareness Fund (DEAF). This fund is regulated by the Reserve Bank of India (RBI) and is used for depositor education and protection.

Funds moved to DEAF can include:

  • Savings account balances
  • Fixed deposits
  • Recurring deposits
  • Current accounts
  • Cash credit accounts
  • Margin money and other security deposits

What Is the Depositor Education and Awareness Fund (DEAF)?

The DEAF holds unclaimed funds and ensures they remain available for depositors or their heirs to claim. If you realize you have unclaimed deposits after they’ve been transferred to DEAF, you can still retrieve your money by contacting your bank.

  • Who can claim? – Either the account holder or legal heirs (in case of the depositor's death) can request a refund from the bank.
  • Interest inclusion – Banks are required to return the principal along with any accrued interest (if it was an interest-bearing account).
  • Reimbursement to banks – After reimbursing the depositor, the bank seeks reimbursement from the RBI.

There’s no deadline for reclaiming your funds from DEAF, but it’s best to act promptly to avoid any complications.

What if the Bank Goes Bankrupt?

In unfortunate cases where a bank is declared bankrupt, claiming your funds follows a different process. Here’s how it works:

  • Deposits up to ₹5 lakh – These are covered under Deposit Insurance and Credit Guarantee Corporation (DICGC), and you can receive this amount through DICGC insurance.
  • Deposits above ₹5 lakh – The bank’s liquidator will handle claims for amounts above ₹5 lakh, reimbursing depositors based on availability and relevant requirements.

How to Avoid Losing Track of Your Accounts and Deposits

Keeping track of your accounts can save you from future hassles. Here are some tips:

  • Minimize accounts – Limit the number of accounts you open to avoid forgetting them.
  • Share account details with family – Ensure that close family members know about any major savings or FDs, especially if they aren’t auto-renewed.
  • Use UDGAM – The UDGAM portal helps you check for any unclaimed deposits across banks in India. It’s a useful tool to quickly locate forgotten accounts and retrieve funds.

By managing your accounts wisely, you can avoid the lengthy process of reclaiming unclaimed deposits and ensure your funds are readily accessible when needed.