Can Funds From Inactive Personal Bank Accounts Be Transferred to the State Treasury?

March 29, Kathmandu – Following the decision by Prime Minister Balendra Sah’s government to transfer funds from bank and financial institution accounts inactive for 10 years to the state treasury, savers have shown increased interest and concern.

The government’s 100-point administrative reform plan, under point 78, directs that for effective use of inactive state resources, details of bank and financial institution accounts inactive for 10 years or more will be collected. Unclaimed funds will be legally transferred to the state treasury, with other resource identifications and management to be completed within 90 days.

After declaring the policy to move funds from ‘dormant’ accounts inactive for ten years to the state treasury, many bank customers who have not conducted transactions for a long time have become interested in the matter.

The question arises: once a personal account becomes dormant, can the funds be transferred to the state treasury after 10 years? What is the legal basis for this? And how will the process be carried out?

Although the government intends to transfer inactive deposits of bank and financial institutions into the state treasury, it has stated that all necessary legal procedures will be completed.

According to former banker Bhuvankumar Dahal, even if an account becomes inactive, the funds belong to the individual and cannot be transferred to the state treasury without due process.

He explains that while the government has resolved to move deposits inactive for over 10 years into the treasury, it must ensure mechanisms to refund funds upon claim by depositors or rightful owners.

“Currently, the government cannot access funds in accounts dormant for 10 years or more without legal amendments,” he said. “Legal amendments are required for such actions.”

Since depositors or rightful owners can reclaim the funds upon request, he considers it appropriate to invest such financial resources into development projects.

Section 112 of the Bank and Financial Institution Act 2073 mandates that banks or financial institutions submit details of deposits inactive for 10 years or whose owners have not claimed them to the central bank within the first month of the fiscal year.

Banks and financial institutions must notify depositors once every five years through national daily newspapers to claim their funds. They must also publish detailed information on their websites.

“If funds remain unclaimed for up to 20 years, the amount is deposited with the central bank’s Banking Development Fund and utilized for banking development,” the act states. Dahal suggests the government amend the act to allow transferring these funds directly to the state treasury.

He further recommends establishing clear procedures for payment if depositors claim their funds after they have been moved to the treasury.

Although banks must annually submit data on dormant accounts to the central bank, a central bank official said data clarity is lacking due to accounts not being classified by dormancy period.

According to the central bank’s unified directive, savings accounts with no transactions for three years, and current or call accounts with no transactions for over a year, are considered inactive.

When reactivating dormant accounts, only updated documentation as per customer identification policy is required.

The central bank provides facilities to update customer identification and reactivate accounts electronically.

In the event of an account holder’s death, rightful heirs can claim the funds and close the account, while living account holders can reactivate accounts by submitting an application and appearing in person.

The central bank reports that over 1.06 billion NPR has already accumulated in the Banking Development Fund from accounts inactive for more than 20 years.

Funds in dormant accounts inactive for over three years amount to approximately 180 billion NPR. Bank officials note that many dormant accounts belong to individuals who have been abroad for 4–5 years.

Since accounts can be reactivated upon the account holder’s return, central bank officials believe the government is unlikely to collect large sums from inactive accounts as anticipated.

After a specified period, account holders or rightful owners can legally claim funds through the central bank with appropriate documentation.

Due to variations in dormancy periods across banks, the amount of inactive funds varies. Officials acknowledge many accounts become inactive due to foreign employment or education.

They warn that if the government were to use these funds for other purposes without proper legal provisions, it might lead to complications. Currently, the law does not permit the state to utilize these funds, necessitating legal reform.

Because dormant accounts can be reactivated at any time, the government’s expectations of significant funds flowing from these accounts are minimal.

Officials emphasize the importance of providing sufficient prior information to the public throughout the process and establishing legal frameworks ensuring the state pays funds upon presentation of claims later.

Central bank representatives have offered to facilitate government programs. “It is possible to proceed with utilizing inactive deposits within the designated timeframe,” one official said.