Financial Times

The Banking Act also specifies that when the monies are so transferred to the Central Bank, the relevant bank has to publish in all the three languages, viz., Sinhala, Tamil and English, the details of such accounts in newspapers. In this manner, the transfer being made in terms of the Act is done openly and not secretively

The Central Bank said last week that it had no intention to seize dormant bank accounts and freeze the funds, saying claimants or holders of these accounts can claim the funds at any time

In a clarification on the treatment of Dormant Accounts (Abandoned Property) of banks, the Bank said a distorted and fabricated news item regarding the treatment of dormant accounts (abandoned property) of banking institutions has been circulating in the country.

It didn't identity the source of the article but said the news item has created fear among bank customers that the monies in their accounts, specifically those in foreign currency accounts, are to be seized by the government through the Central Bank which it said was incorrect.

In a statement it said:

The Banking Act, which was enacted by Parliament as far back as 1988, took the precautionary step of protecting the interests of banks depositors who do not do any transactions for a considerable period of time by introducing procedures for the treatment of such accounts in line with the international best practices. International experience has shown that when an account remains dormant for a considerable period of time, numerous malpractices and misappropriation of funds could take place without the knowledge of the deposit holder. Hence, it has become necessary for banks to adopt a specific procedure in order to protect the interests of the depositors.

Accordingly, Section 73 of the Banking Act provides for that any licensed commercial bank holding such abandoned property/dormant accounts should report to the Monetary Board of the Central Bank the nature of the articles held and in the case of money, the amount of money involved. Section 72 of the Act specifies the types of articles to be so reported should have been lying there in the banks without any transactions for a period of 10 years.

Hence, the Act requires banks to transfer such monies to a special account in the Central Bank on the direction of the Monetary Board. The purpose of the provision is to protect the monies by vesting the authority to keep the accounts with the Central Bank so as to remove opportunities for alleged misappropriations.

The transfer of these dormant accounts to the Central Bank in no way implies that the monies have been seized by the Government or the Central Bank. Any bank depositor whose monies so transferred in this manner can show himself up at any time to the Central Bank and the Bank, upon verification of the authenticity, will repay the monies lying to his credit in the special account with interest. Hence, the sole objective of identification and reporting of abandoned property or dormant accounts as legislated as far back as 1988, has been to collect, safeguard and return such property to their lawful owners.