Why are banks so profitable?
Well Mr Mohandas Karamchand Gandhi opened an account with Imperial Bank of India and left Rs. 50 in his bank account. His children did not know about this account. What happens?
Simple it stays with the bank. So many accounts of people who are dead, or those who have forgotten, etc. are just swallowed by the bank.
Theoretically it is a liability, and the bank provides for interest on those amounts, but hey the bank does not EVER HAVE TO REPAY this amount.
What happens to people who have opened mutual fund accounts with various fund houses? And forgotten about the same. Let us assume it is a ‘growth’ option – the fund house makes no attempt to send them a balance confirmation, etc.
In fact Mrs. Savithri has opened 2 accounts with the SAME FUND HOUSE, at different points in time. In one she has given the PAN, in the earlier one she has not. The fund house DOES NOT even track the 2 schemes TOGETHER, because the tracking in PAN wise. I know people who have got statements MISSING OUT ONE SCHEME and unless you are an alert client, the other folio is just lost in the din!
So all the money which NEVER belonged to a bank or a mutual fund are still lying with the fund house / bank. Now if an AMC has a capital of Rs. 10 crores and ‘untraceable owners’ fund of Rs. 100 crores, it looks a little unfair does it not? lol….
What can the government do? Well knowing the government and its great regulators, they will do NOTHING. What could they do?
They should be forced to send a letter to the holder at the last known address and see what is the response. If they have the PAN, they could give it to the registrars and see if they have applied for Kyc. They could trace some application to the bank account where some dividends were credited and send a notice to the bank…
Seriously there are many things that it can do, but does nothing about it!
Suddenly one day when they are more desperate, they will ask the banks and mutual funds to transfer all this to the Consolidated fund of India. God bless.
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