Nepal Plans to Transfer Funds from Long-Dormant Bank Accounts to State Treasury

Kathmandu. It has been found that nearly 17.75 billion rupees are held in accounts that have remained dormant for 10 years or more.

According to the Nepal Rastra Bank, as of the end of last Ashar, there was 17.63 billion rupees in dormant accounts. The central bank stated that the number of such accounts stands at 3,645,593.

The Bank and Financial Institutions Act, 2073, mandates that details of accounts dormant for such a period must be submitted to the Rastra Bank annually. Based on reports submitted by banks up to the fiscal year 2081/82, the total amount and number of accounts have been identified.

The first cabinet meeting of the new government included a provision in the '100-point Governance Reform Agenda' to transfer funds from bank accounts dormant for 10 years or more into the state treasury through proper procedures. Nepal Rastra Bank officials state that if this agenda is implemented, these funds will move from banking accounts to the government treasury.

On the other hand, the total amount that has moved to the Banking Development Fund under the Rastra Bank after being dormant for 20 years or more is only 67.6 million rupees.

Section 112(1) of the Act requires banks to report accounts dormant for 10 years to the Rastra Bank annually, call for claims every 5 years, and if unclaimed for 20 years, the funds are deposited into the Rastra Bank's Banking Development Fund for use. However, there is no provision regarding what happens if someone comes to claim the money after it has already been transferred to the fund.

Banking expert Bhuvan Dahal notes that because there is no clear legal provision and no one has come forward to claim the funds so far, it is unclear what would happen if someone were to request them later.

'Generally, the principle is that even if money goes into a fund, if someone comes with a valid claim, it should be returned,' says Dahal. 'However, since the Act is silent and no one has appeared to claim it, this fund is currently being utilized.'

According to the received details, the average amount in a dormant account is 5,000 rupees, which is a significant sum for an average citizen. With the decision to bring money from accounts older than 10 years into the government treasury, there is concern and curiosity about whether this money will be confiscated.

Banking expert Dahal argues that this money should not be confiscated but only utilized as a source of funding.

'Even if the government intends to draw these funds, it should not be treated as revenue, but only utilized as a resource,' says Dahal. 'I have already sent a message to the Finance Minister regarding this. He also mentioned that it would not be treated as revenue, but only used as a resource.'

• Process and Preparation

Under the policy of effectively utilizing the state's dormant resources, the government has set a 90-day deadline to bring unclaimed funds into the state treasury after completing legal procedures and to identify and manage other resources.

The Ministry of Finance stated that discussions have been held at various levels between the Ministry of Finance and the Nepal Rastra Bank to implement the action plan. Following the announcement of the agenda, there was also a dialogue between Finance Minister Dr. Swarnim Wagle and Nepal Rastra Bank Governor Dr. Bishwo Poudel.

The Rastra Bank stated that since the implementation of this point requires an amendment to the Act, necessary preparations have begun. 'Without legal provisions, banks cannot send money from any account to the government, and the Rastra Bank cannot issue such directives to banks. Therefore, the BAFIA must be amended,' says a Rastra Bank official. 'After it appeared on the government's agenda, we are drafting it; what form it takes is a matter for the government.'

• 'Confiscation is Unconstitutional'

As the government prepares to bring dormant account funds into the state treasury for expenditure, its legal and constitutional validity is being debated. There is a dispute over whether the state can utilize citizens' property when the constitution guarantees the right to property.

Article 25 of the Constitution of Nepal, which deals with the right to property, grants every citizen the right to acquire, enjoy, and accumulate property, except for that acquired illegally.

Banking law expert and Senior Advocate Resham Regmi states that the state cannot confiscate citizens' property. However, he suggests that it could be utilized on the condition that it is returned if a claim is made, provided a law is enacted for accounts unused for a certain period. He emphasizes that such legislation must not lead to a situation where the depositor's security and returns are lost.

He suggests that even if the funds from dormant accounts are transferred to the Banking Development Fund or the state treasury, they should be returned from the government treasury if the actual beneficiary comes forward with proof of claim later.