THIS is with reference to the letter `Banking woes` (Oct 19). The financial institutions are instructed to surrender `unclaimed` deposits in customer accounts to the State Bank of Pakistan (SBP) in case the accounts have not been kept functional for 10 years.

I am curious to know and seekclarification from the regulators about the fate of such `unclaimed` deposits.

What is the logic of transferring unclaimed deposits to the SBP after 10 years? Why can they not be kept at the bank branches as per previous practice? Why do customers have to open a new account to get their unclaimed deposits back? Why does a customer need to provide documentary evidence of the source of funds already held with the bank for over 10 years, especially when no new deposits have been added tothe account? Besides, do the unclaimed deposits with SBP accrue any interest for the period they are retained by the SBP? Under what head of account are these unclaimed deposits placed at the SBP and till what time? How are these deposits, which must have been running in millions if not billions of rupees, utilised and finally settled? Moving on, how does the SBP ensure that the unclaimed deposits being surrenderedbybankshave undergone due diligence, like intimating/ contactingthe accountholders and their next of kin on the given address/ contact? Can deposits in a customer account be categorised as `unclaimed` even if the account holder visits the branchinpersonandtendersa biometric verification before the physical transfer of funds to the SBP? These are the questions that need to be clarified by the SBP. Many people are unaware that the deposits held in theiraccountshave been surrendered to the regulator.

In many cases, either such persons have left for the eternal abode, or have inhibition in taking up such issues with the authorities concerned due to lack of knowledge/education, and hardly any publicity or awareness campaign is conducted by the regulators/financial institutions about the importance of keeping an account active. So, what is the solution? In civilised countries, unclaimed deposits surrendered/transferred to the central bank or some other statutory body keep on earning interest. An account is considered dormant when it is inactive for 15 years or more. The funds in such a dormant account are transferred to, say, Reclaim Fund Ltd (RFL), which is an authorised and regulating body established by the Financial Conduct Authority in the United Kingdom. The funds in such a dormant account may be distributed for the benefit of the community while protecting the rights of customers to reclaim their money.

Meanwhile, the SBP needs to revisit its policy in the matters raised above, and do some brainstorming to somehow streamline the procedure in order to provide convenience to bank customers.

Muhammad K. Sufi Islamabad