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Accounting update

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Outstanding credit amount of any account in India with any bank which has not been operated upon for a period of ten years or any deposit or any amount remaining unclaimed for more than ten years is required to be transferred to the Depositor Education and Awareness (DEA) Fund of RBI, within a period of three months from the expiry of the said period of ten years1 Source: https://sbi.co.in/web/personal-banking/information-services/deaf-claim .

As per the current guidelines, commercial banks are required to present all unclaimed liabilities, where the amount due has been transferred to the DEA Fund under ‘Schedule 12 – Contingent Liabilities – Other items for which the bank is contingently liable’.

In order to ensure consistency in presentation of financial statements, RBI, vide a notification dated 25 October 2023 has stated that co-operative banks should present the unclaimed liabilities (where the amount due has been transferred to DEA Fund) under ‘Contingent Liabilities – Others’.

Additionally, all banks should disclose in the notes to accounts2Note C10- which deals with Transfers to Depositor Education and Awareness Fund (DEA Fund) that balances of the amount transferred to DEA Fund are included under 'Schedule 12 – Contingent Liabilities – Other items for which the bank is contingently liable' or 'Contingent Liabilities – Others,' as the case may be.

Effective date: The revised guidelines are applicable to all commercial and cooperative banks for preparation of financial statements for the year ending 31 March 2024 and onwards.

To access the text of the RBI notification, please click here

Action Points for Auditors

Auditors of commercial and co-operative banks should consider this update and review compliance with the disclosure requirements for the financial statements prepared for the year ending 31 March 2024 and onwards.

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