20 Billion Nepali Rupees in Bank Accounts Inactive for Over 10 Years: Government Prepares to Transfer Funds to State Treasury
Image source, Getty Images
Following the new government’s plan to transfer funds from inactive bank accounts to the state treasury, Nepal Rastra Bank has begun compiling details of such accounts, according to the central bank’s spokesperson.
Nepal Rastra Bank spokesperson Guruprasad Paudel informed that approximately 4.34 million bank accounts in commercial banks have been inactive for over 10 years.
“The balance in these accounts amounts to NPR 2.064 billion,” Paudel added.
Banks and financial institutions are legally obligated to report details of accounts inactive for 10 years to the regulatory body, Nepal Rastra Bank.
According to Section 112 of the Bank and Financial Institution Act, “Banks or financial institutions must submit details of deposit accounts that have not been active or claimed according to the Act for 10 years or more at the start of each fiscal year to Nepal Rastra Bank.”
Per the law, only accounts inactive for 20 years can be transferred to the Banking Development Fund established by Nepal Rastra Bank.
However, the central bank reports that only NPR 7 million has been accumulated in this fund so far.
“The circular issued to banks and financial institutions states that if an account holder arrives with complete documentation, the bank can still disburse funds even from this development fund, which explains why only about NPR 7 million has been accumulated,” Paudel said.
Nepal Rastra Bank notes that this amount is pooled from roughly 10 banks and financial institutions.
Paudel explained that some accounts inactive for 20 years may still be in the process of fund retrieval or subject to claims and thus not yet transferred to the fund.
Government Preparations
Image source, Ministry of Finance
The government’s 100-point governance reform agenda released last month includes a plan under point 78 to transfer funds from inactive bank accounts to the governmental treasury.
“To efficiently utilize the state’s inactive resources, the government will collect details of bank and financial institution accounts inactive for 10 years or more, and following due legal process, transfer unclaimed funds to the state treasury within 90 days, alongside identifying and managing other resources,” the plan states.
However, experts and central bank officials have said that legal amendments will be necessary to implement this government announcement.
Current law allows accounts inactive for 10 years to be closed, but funds can only be transferred to the designated fund after 20 years of inactivity. Banks must publish notifications about such inactive accounts listed every five years in major national newspapers and on their websites.
Many commercial, development banks, and other financial institutions currently in operation have not reached 20 years since establishment, according to informed sources. The Ministry of Finance has assigned the Financial Sector Management Division chief to coordinate with Nepal Rastra Bank and conduct studies on these accounts and their fund management.
“We are identifying the number of such accounts and their balances to study how these funds can be utilized,” Ministry of Finance spokesperson Tank Prasad Pandey told BBC Nepali News.
“Based on their recommendations, decisions will be made regarding necessary legal amendments and other measures.”
How Many Inactive Accounts Are There?
Image source, NRB
Current regulations classify accounts with no transactions for three years as inactive accounts.
“According to Nepal Rastra Bank definitions, savings accounts inactive for three years and current or call accounts inactive for one year are considered inactive,” explained spokesperson Paudel.
In Nepal, with a population of around 30 million, over 60 million bank accounts have been opened, the central bank reports.
A 2021 study by Nepal Rastra Bank showed that approximately one-third of all deposit accounts are inactive.
Based on this, around 20 million accounts are currently inactive.
The Rastra Bank study also found more inactivity among institutional accounts compared to individual ones, notably among non-financial institutions.
Accounts under women’s names were less inactive compared to men’s, the central bank’s analysis revealed.
Paudel attributed account inactivity also to people going abroad for employment and opening new bank accounts for convenience.
Furthermore, the highest number of inactive accounts are in metropolitan and sub-metropolitan areas while the fewest are in rural municipalities. Bagmati Province has the highest number of inactive accounts, while Sudurpashchim Province has the lowest, according to the study.
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