Is Mobilising Dormant Accounts Feasible ?

The Rastriya Swatantra Party (RSP), a relatively new political force in Nepal, came to power after sweeping the March 5 general elections. The party secured 182 seats of the Federal Parliament, just two seats short of the two-thirds majority. The new government formed under the premiership of Balendra Shah has made public a 100-point governance reform agenda, one of which is transferring the balances in accounts maintained with banks and financial institutions  that have remained dormant for ten years or over to the state coffers, a process called escheatment, as part of mobilising funds for development activities. 

Dormant accounts are those that have remained inactive for a certain period of time. Inactivity of accounts is when transactions such as deposits, withdrawals or transfers do not take place in the accounts. Interest posted and charges levied by banks do not count towards transactions that will make the accounts active. Accounts fall into dormancy owing to several factors. Leaving the accounts unused for a long time is the principal cause of the accounts becoming dormant. Some people open accounts for the sake of maintaining accounts with banks and they may forget that they have accounts. Some account-holders may be away from home. And some account-holders may have died and their nominees may not have claimed the funds. 

Regular transactions

To prevent accounts from falling into dormancy, account-holders need to be careful. They should monitor their accounts regularly and make regular transactions. They should keep themselves updated about their accounts. They should inform banks about changes in their addresses, contact numbers or personal details in compliance with KYC (know your customer) protocols. Dormant accounts are sensitive accounts. As they have been left inactive for a long time, they may be misused. That is why banks restrict or block such accounts for the benefit of account-holders. 

However, deposits can be made to such accounts but withdrawals or transfers are completely restricted. Banks are required to submit details about dormant accounts ten years old to the Nepal Rastra Bank (NRB). Rules regarding declaring accounts dormant vary from country to country. In Nepal, savings accounts become dormant if no transactions take place for three years. Likewise, no transactions taking place for six months makes the current and call accounts dormant. When accounts become dormant, account-holders should contact their banks and have their accounts verified by filling in KYC forms. In this way, dormant accounts can be reactivated.

Is it possible for the government to escheat funds in dormant accounts?  For this, it would be pertinent to refer to the provisions regarding dormant accounts in the Banks and Finance Institution Act (BAFIA), 2017. As per the provisions, if accounts have no transactions for ten years and have a zero balance, such accounts may be closed after publishing a public notice in national newspapers.  In case there are no transactions in accounts for ten years or account-holders do not claim their funds, banks and financial institutions must publish a notice once every five years in national newspapers and show details on their official websites. 

If such funds remain unclaimed for 20 years or if account-holders cannot be traced, such funds must be deposited into the Banking Development Fund of the NRB. Such funds can always be claimed by rightful owners. Claims of such funds by anyone other than the rightful owners are not entertained. Such funds are not to be used for purposes other than banking development. It is estimated that there are over ten million dormant accounts in the banking and financial sector. As of mid-July 2025, the Banking Development Fund had around Rs. 70 million. 

The government is planning to escheat funds in dormant accounts ten years or more old to the state coffers as part of the mobilisation of funds for national development. But the existing banking laws do not allow this. For this, amendments to the BAFIA are required. Such amendments need to be endorsed by parliament and assented to by the President. It seems the government is planning to escheat dormant account funds without studying the banking laws. The laws clearly state that such funds may be transferred to the Banking Development Fund under the jurisdiction of the NRB, not to the state coffers. Nepal needs to be developed. For this, funds on a large scale are needed. The government should explore other avenues of fund mobilisation. 

Development potential 

Nepal has the potential for development in agriculture, industry, tourism, hydropower and other sectors. Agricultural development has remained sluggish. Arable land in rural areas has remained fallow for lack of manpower engendered by the migration of people. Many industries have closed after the restoration of multi-party democracy in 1990. Tourism has bright prospects but tourism infrastructure is weak. The country has not been able to woo more than 1.2 million tourists annually. However, headway in hydropower can be considered satisfactory. There is much potential to further develop the hydropower sector. 

It is an irony that when there are many irons in the fire in terms of initiating development works, many Nepalis are abroad working for other countries. They have gone abroad for foreign employment as jobs are lacking in Nepal. The government should, therefore, devise a policy of retaining youth in the country by offering them jobs. When jobs are created in the country, there is no need for them to go abroad. The mentality of sustaining the economy through remittances should be abandoned. Political disturbances or other causes in destination countries may upend the inflow of remittances. So the government should mobilise funds for development by developing the “dormant” sectors rather than by eyeing dormant account funds. 

(Maharjan has been regularly writing on contemporary issues for this daily since 2000.)