The government has drafted a basic plan to utilize so-called dormant deposits (see below), money in accounts at financial institutions from which there have been no withdrawals or deposits for at least 10 years, The Yomiuri Shimbun has learned.
Under the draft plan, the idle money will be used for public activities of nonprofit organizations and other entities in the private sector, via an organization designated by the prime minister.
To ensure strict management of the funds, a special section will be set up at the designated organization to monitor irregularities, and the period over which subsidies will be provided for a project will be specified in advance.
The government plans to finalize the basic plan by the end of this fiscal year, and aims to realize the system from autumn 2019.
About 70 billion yen in deposits newly qualifies as dormant each year, and this money currently becomes the income of financial institutions. Based on the law to use dormant deposits enacted in 2016, the government is working to design a system to utilize such money.
About 50 billion yen, the amount excluding funds in reserve for repayment demands, is expected to be targeted under the system annually.
The draft basic plan regards the use of dormant deposits, which are also private assets, as a "pilot program that is unprecedented in our country." It also says the money will be used for activities not covered by public systems.
Specifically, the activities are likely to include assistance to young people by NPOs and volunteer groups, and projects to vitalize regional areas.
Dormant deposits will be managed collectively by a designated utilization organization after being transferred to the Deposit Insurance Corporation of Japan. The money will be then sent to "fund distribution organizations," which are familiar with local conditions, and will eventually go to NPOs and other entities. The designated utilization organization will select distribution organizations after screenings.
The draft plan also calls on the designated utilization organization to announce the screening criteria for fund distribution bodies in advance and not excessively select distribution organizations from urban areas. The plan refers to the need of setting up a special section to monitor irregularities.
Regarding the conditions for receiving subsidies, the draft plan calls on recipients to specify in their project plans the results they aim to achieve and the period for which they need to be subsidized via dormant deposits, among other things.
To prevent NPOs and other entities from relying heavily on dormant deposits to operate their projects, the fund distribution organizations are called upon to provide support in keeping with the progress made in projects.
Based on the draft plan, the government intends to draw up basic plans by the summer of 2019 that will specify more specific requirements for screening projects.
-- Dormant deposits
Deposits in financial institutions' accounts for which there have been no deposit or withdrawal activities for a long time, presumably because the depositors have died or forgotten about the accounts. Following the December 2016 enactment of the law to use dormant deposits, part of deposits that have remained idle for 10 years or more as of Jan. 1, 2019, will be utilized for public-interest activities. Countries such as Britain and South Korea have introduced similar systems.
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