The government began in February looking into ways to make good use of billions of yen in so-called dormant bank accounts, particularly to help fund reconstruction of areas in the Tohoku region devastated by the March 2011 Great East Japan Earthquake and tsunami.
An interim report compiled in May estimated the amount lying idle in dormant accounts in banks across the nation at about ¥85 billion every year, and 90 percent of the accounts have less than ¥10,000 in them.
A government panel meeting to discuss tapping these accounts hopes to use the money toward Tohoku recovery projects.
Following are questions and answers about these accounts.
What defines a dormant account?
A bank account that has had no activity or access for more than 10 years and has ¥10,000 or less in it qualifies as a dormant account, and the bank can seize it as profit.
If an inactive account holds more than ¥10.000, the bank must notify the depositor, but if attempts to make contact fail, the bank can also take the money as profit.
The commercial law stipulates that depositors lose their rights to money if there are no transactions for five years or more. However, in reality, banks return the funds to the depositors even after these accounts are no longer being used.
Are there exceptions?
Yes. Resona Bank charges ¥1,200 a year on accounts opened after April 2004 that have less than ¥10,000 in them if they are inactive for more than two years.
Japan Post Bank notifies depositors if money is kept for 30 years in the bank’s fixed deposits with maturity periods of up to 10 years. This, however, only applies to money deposited before 2007.
If the account is expired, the money will be turned over to the government. As of March, ¥5.3 trillion in such deposits had not been returned and is being kept in Japan Post Bank, according to the Management Organization for Postal Savings and Postal Life Insurance.
How can one check if someone has a dormant account?
Unless people already know they have such accounts, finding any may be very hard. In South Korea and Britain, websites are available where people can search for dormant accounts.
How much money is returned to depositors every year?
According to a government report, about ¥35 billion, or 40 percent of the total amount in dormant accounts, is returned.
The figure does not include deposits in banks linked to Japan Post, Japan Agricultural Cooperatives and Japan Fisheries Cooperatives. But those funds account for only 6 percent of some 13 million dormant accounts.
Why are there so many dormant accounts?
Opening a bank or postal savings account is easy and requires no fee, and it is not uncommon for individuals to have several accounts.
According to Katsuyoshi Nagayasu, chief executive officer of Mitsubishi UFJ Financial Group Inc. and former head of the Japanese Bank Association, there are some 1.2 billion bank accounts in Japan. This roughly translates into 10 bank accounts for every individual.
There are some 150 million accounts in Britain and about 170 million in South Korea.
However, closing a bank account can be problematic. Some banks require depositors to go to the branch where they opened the account, and that may no longer be near where they lived.
Depositors who have moved also need to produce a certified copy of their family register to prove they resided at the address listed when they opened their accounts. Closing an account can also be difficult if the depositor has lost the bank book or “hanko” personal seal used with the original account.
How would the government tap the dormant accounts?
The government hopes to invest the money in Tohoku-based businesses, including promising venture firms and nonprofit organizations providing nursing care for children or welfare services for the elderly.
A detailed plan may be compiled by summer. National policy minister Motohisa Furukawa said in February he “hopes to create new employment and industry” by using the dormant accounts.
The government is now considering using dormant accounts that exceed ¥10,000. There are around 130,000 of them, or some 10 percent of the total, collectively worth about ¥45 billion.
A government panel meanwhile said in May the money should be returned to depositors if requested. The government will not tap bank accounts that were dormant before but are now being used, while the government needs to legislate the steps, according to the panel.
How are banks reacting to this move?
They are not very eager to cooperate with the government. “If the government controls dormant accounts collectively, the cost to create a new system to do so will swell,” Nagayasu said in February.
Furukawa said last month the government will examine how much it will cost to manage these dormant accounts.
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