Module: | Capital Adequacy, Basel Norms & Monetary Policy
Q18: Consider the following statements regarding the regulatory framework and operational timelines of the Depositor Education and Awareness (DEA) Fund:
1. Banks must transfer credit balances remaining unclaimed for 10 years or more, including unadjusted NEFT credit balances and undrawn prepaid cards, to the DEA Fund exclusively during the last 5 working days of the subsequent month.
2. The interest payable by a bank to claimants on the principal amount of unclaimed interest-bearing deposits transferred to the Fund is rigidly fixed at 3 percent with effect from May 11, 2021.
3. Any unclaimed amount payable in foreign currency shall be converted into Indian Rupees at the exchange rate prevailing on the date of the customer's claim, and the Fund shall refund the eligible amount in foreign currency.
4. Banks are mandated to preserve records of accounts credited to the Fund permanently, and in cases where a refund is claimed from the Fund, the records must be preserved for at least 5 years from the date of refund.
Which of the statements given above is/are correct?
2. The interest payable by a bank to claimants on the principal amount of unclaimed interest-bearing deposits transferred to the Fund is rigidly fixed at 3 percent with effect from May 11, 2021.
3. Any unclaimed amount payable in foreign currency shall be converted into Indian Rupees at the exchange rate prevailing on the date of the customer's claim, and the Fund shall refund the eligible amount in foreign currency.
4. Banks are mandated to preserve records of accounts credited to the Fund permanently, and in cases where a refund is claimed from the Fund, the records must be preserved for at least 5 years from the date of refund.
Which of the statements given above is/are correct?
✅ Correct Answer: A
The correct answer is A. Statement 1 is correct: Banks are required to credit the Fund with any deposit or credit balance (including unadjusted NEFT balances and prepaid cards with no maturity) remaining unoperated for 10 years or more, and this transfer must be executed through the e-Kuber system during the last 5 working days of the subsequent month.
Statement 2 is correct: As per the tiered interest calculation guidelines, the interest payable on the principal amount of unclaimed interest-bearing deposits transferred to the Fund is rigidly fixed at 3 percent with effect from May 11, 2021, calculated from the date of transfer to the date of payment.
Statement 3 is incorrect: Any unclaimed amount payable in foreign currency must be converted into Indian Rupees at the exchange rate prevailing strictly on the date of transfer to the Fund, not the date of the customer's claim.
Furthermore, irrespective of whether the bank pays the customer in INR or foreign currency, the bank is entitled to claim the refund from the Fund in Indian Rupees only.
Statement 4 is correct: Banks must permanently preserve documents containing details of accounts credited to the Fund.
For accounts where a refund has been claimed from the Fund, the preservation period is strictly at least 5 years from the date of refund.
Statement 2 is correct: As per the tiered interest calculation guidelines, the interest payable on the principal amount of unclaimed interest-bearing deposits transferred to the Fund is rigidly fixed at 3 percent with effect from May 11, 2021, calculated from the date of transfer to the date of payment.
Statement 3 is incorrect: Any unclaimed amount payable in foreign currency must be converted into Indian Rupees at the exchange rate prevailing strictly on the date of transfer to the Fund, not the date of the customer's claim.
Furthermore, irrespective of whether the bank pays the customer in INR or foreign currency, the bank is entitled to claim the refund from the Fund in Indian Rupees only.
Statement 4 is correct: Banks must permanently preserve documents containing details of accounts credited to the Fund.
For accounts where a refund has been claimed from the Fund, the preservation period is strictly at least 5 years from the date of refund.