CB Governor clears the air on dormant bank accounts

December 31, 2015

Central Bank Governor Arjuna Mahendran today refuted as ‘erroneous’ news reports claiming that bank accounts dormant for one year will be taken over by the Ministry of Finance. 

“I don’t know where this information was obtained by the newspaper concerned but that is completely erroneous. It is not based on any proposal I have seen,” he told reporters in Colombo. 

The Governor said that he has spoken to the Minister of Finance and he has underlined the fact that the normal procedure is that if bank accounts are dormant for 10 years, the monies traditionally have been transferred from the commercial banks to the Central Bank and kept in a special account which is then frozen and if the rightful owner comes back and claims their money it is returned to them. “That is the standard procedure.” 

What the Minister of Finance has suggested is that that money can be held in the Treasury in the consolidated fund instead of in the Central Bank, Mahendran said.

“I just want to make it clear that this story about dormant accounts becoming dormant after one year is not accurate at all.” 

He stated that all that’s happening is in a dormant account after 10 if somebody doesn’t have any transactions in their bank account typically the banks put that into a suspense account and if that persons comes back 20 or 30 years later he or she is still entitled to take those monies out. 

“So there is no concept of confiscation here. I want to make that clear. This is standard international practice what we call abandoned property,” he asserted.

Explaining further, he said, abandoned property is after 10 years you just move that to a suspense account because for banks to keep issuing statements and other logistical things is a cost. 

And to reduce those costs banks prefer to move those monies into a suspense account which typically lies with the Central Bank. But in this case the minister is saying that let’s put it into the Treasury, the Governor said. 

“But if the customer comes back to the bank and ask for their money back it will be given. So the bank will then ask the treasury to return those funds and that will be returned to the customers.” 

“At the moment they are with the Central Bank and we invest them in Treasury Bills so actually they go to the Treasury. So the saving for the Treasury is they won’t have to pay interest on these funds. They will keep it in the consolidated fund,” he added.