The government plans to seize tens of billions of yen lying in “dormant accounts” at banks and other financial institutions to help cash-strapped companies and organizations battered by last year's great earthquake and tsunami.
The government plans to seize tens of billions of yen lying in “dormant accounts” at banks and other financial institutions to help cash-strapped companies and organizations battered by last year's great earthquake and tsunami.
Dormant accounts are those that have been inactive for at least 10 years and whose holders cannot be traced.
Each year, some 80 billion yen to 90 billion yen ($1.1 billion to $1.2 billion) in deposits fall into this category.
However, the banking industry is fiercely opposed to the government's plan on grounds it amounts to robbing valued customers.
"There is no way the government can justify siphoning off these funds," said a banking source.
According to confidential government records, between 73 billion yen and 77 billion yen in deposits fall idle in conventional banks each year.
The corresponding figure for smaller financial institutions, such as "shinyo kinko" (shinkin banks, which function as credit unions), "shinyo kumiai" (credit associations) and "rodo kinko" (labor credit associations) is 10 billion yen.
When deposits in agricultural cooperatives and Japan Post Bank are included, the total amount is even higher.
The 80 billion yen to 90 billion yen now coveted by the government is equivalent to funds earmarked in the fiscal 2012 budget to help struggling small and midsize companies.
“It would be a crime to leave the money (deposits in dormant accounts) as it is. Society can greatly benefit from use of these funds," said a government official.
Under its plan, the government will transfer the money to a fund to be set up by a third-party organization. The funds will then be used to help firms affected by the March 11 disaster as well as venture companies in financial difficulties. Funds would also be provided to nonprofit organizations.
Under the Commercial Code, people lose their right to deposits held at conventional banks if five years have passed since the last transaction. In the case of smaller financial institutions, the corresponding period is 10 years under the Civil Code.
Even after those periods have passed, however, financial institutions are obliged to honor deposits in dormant accounts if an application to withdraw the funds is made.
Each year, some 35 billion yen is paid back. The remaining 45 billion yen to 55 billion yen then officially is listed as income for financial institutions.
(This article was written by Yukako Ito and Hirobumi Ohinata.)