A massive sum of over Rs2 lakh crore of people's unclaimed money lies trapped with the government, poorly accounted for and frustratingly difficult to reclaim, either by the original owners or, more often, by their heirs. These unclaimed funds represent the hard-earned savings of ordinary citizens, held in various forms such as bank deposits, insurance policies, provident funds, post-office savings, shares, bonds and corporate fixed deposits (FDs). However, neither the government nor the political establishment seems serious about easing the struggle of rightful claimants to reclaim their money.
One major problem is that the money is disaggregated and pooled across multiple regulators and ministries, making it difficult to ascertain the total sum involved. Over the past few years, I have been writing on various aspects of this issue and also made some progress. In 2022, I filed a public interest litigation (PIL) in the Supreme Court (SC) with the support of senior counsel Prashant Bhushan. The PIL sought to make public, on a centralised platform, details of unclaimed money belonging to investors and depositors, making it more accessible to their rightful legal heirs. The SC considered it an important issue and issued a notice to various regulators, leading to efforts to improve accessibility and reporting of funds as well as an effort by banks trace rightful claimants (Read: SC Issues Notice on Plea By Sucheta Dalal That Information on Unclaimed Amounts Lying in Dormant Accounts Be Made Publicly Available on a Centralised Platform).
Although the sums involved are enormous, the issue is hardly discussed by the mainstream media. In a positive surprise, the SC-appointed expert committee investigating volatility in Adani group stocks cited my white paper on the issue. The committee endorsed the need for a ‘Central Unclaimed Property Authority’ (CUPA) for unclaimed assets with interest and benefits accrued on them. It also highlighted the necessity for ‘imaginative re-engineering’ to reunite unclaimed private assets with the successors of deceased investors (SC Committee on Adani Endorses Creation of Central Unclaimed Unclaimed Property Authority Suggested by Moneylife Foundation).
Following this, Moneylife Foundation conducted a detailed study on the challenges in transmitting assets to nominees and heirs, which was released by KV Kamath on 28th August in Mumbai (https://www.youtube.com/live/j1NLPik12L4) followed by a detailed discussion. Acknowledging the difficulties in claiming funds, Mr Kamath said, “I have been through the challenges of claiming assets myself. I consider myself an informed person and we have contacts who can help… I can only imagine what the challenge must be for a layman, who does not have knowledge (of procedures).”
Finding Accurate Data
Our first challenge was to find accurate data, as the government does not report it reliably. We also found that the value of unclaimed money/ financial is likely to be significantly higher than Rs2 lakh crore. Consider this:
The Reserve Bank of India’s (RBI) latest annual report states that Rs78,213 crore was transferred to the depositor education & awareness fund (DEAF) at the end of March 2024 -- a 26% jump over that in the previous year, despite a drive to locate rightful owners. This does not include well over Rs1 lakh crore lying in dormant and inoperative accounts that will be gradually transferred to DEAF after remaining dormant for 10 years (Over Rs1 Lakh Crore Lying in Inoperative Bank Accounts on Way To Becoming Unclaimed Funds)
Another significant amount is tied up in the IEPF under the ministry of corporate affairs (MCA). In response to a Lok Sabha question, the government disclosed that Rs5,714 crore was pending with the IEPF as of 30 July 2023. This figure mainly represents corporate benefits like dividends and interest—not the value of shares lying unclaimed for over seven years. Harsh Roongta, founder of Fee Only Investment Advisor and a personal finance expert, has calculated the value of unclaimed shares of 1,561 listed companies disclosed on the IEPF website as of 1 August 2024, arriving at a staggering Rs82,199 crore. When combined with the Lok Sabha disclosure, the amount totals nearly Rs88,000 crore. (Rs82,199 Crore: That's IEPF's Investment in 1,561 Companies from Unclaimed Funds!). (Our study had a lower estimate from Recoversy.in)
Officially, just under Rs10,000 crore in unclaimed provident fund money was reported to Parliament, but this figure seems highly unrealistic.
We gathered other data from unofficial estimates, since official figures are either unavailable or unreliable. Unclaimed insurance funds estimates range from Rs22,000 crore to Rs27,000 crore, while unclaimed mutual funds total Rs35,000 crore. Another Rs27,000 crore is apparently stuck with the employee provident fund organisation (EPFO), according to Bank Bazar.
Way Forward
No matter how conservative the estimates, the total unclaimed money exceeds Rs2 lakh crore. Apart from the IEPF and DEAF, these funds are held by the senior citizens' welfare fund under the ministry of social welfare or remain with asset management companies (AMCs), in the case of mutual funds.
After our PIL, IEPF and EPFO claim to have improved recovery procedures, but the results are far from satisfactory, although they have a social media presence claiming otherwise. RBI has launched the UDGAM portal—meaning ‘Gateway to Access Information’—allowing claimants to search for deposits across banks. This too has serious accessibility issues. Harsh Roongta notes that without broad search capabilities (Boolean search), especially for common names, the portal is nearly unusable. We have similar feedback on poor processes for post-office schemes.
Why does money remain unclaimed, and what can be done to solve this problem? The reasons include forgotten investments, sudden death, absence of a Will or nomination, and prolonged legal disputes. But a significant factor is the harrowing claims process, regulatory gaps that allow officials to create arbitrary rules, and a general lack of knowledge about succession laws and procedures among officials.
These issues could be easily resolved if regulators issued clear standard operating procedures (SOPs), standardised forms and a list of acceptable documents. But there is no serious effort to put these in place. The Securities and Exchange Board of India (SEBI) alone has made commendable strides in this direction, introducing detailed rules, innovative processes, strict timelines with penalties, and an online dispute resolution (ODR) mechanism. As Harsh Roongta points out, there are some teething issues, but it is the right path. Advocate Joby Mathew, who has worked with SEBI's legal department, echoes this sentiment, noting that the ODR process is a good idea but needs to be made workable by appointing people knowledgeable about succession laws.
Unfortunately, other regulators are less proactive. RBI, for instance, has repeatedly deferred the responsibility of issuing detailed SOPs to the Indian Banks Association which lacks appropriate authority. A survey conducted by Moneylife Foundation uncovered numerous instances of claimants being harassed by nonsensical demands during the claims process.
Some states already register births and deaths online. SEBI has set up a death registry to prevent the submission of multiple copies of death certificates. A modern India, with local and international job-related mobility of millions, needs a central repository for birth and death registrations, along with a unified database that covers financial assets. This would create a transparent and efficient claims process, reducing the amount of unclaimed assets.
Over the past decade, the government has pushed Indians to adopt online processes for filing taxes, submitting statutory information and even know-your-customer (KYC) compliances. The tax department also has a complete, online snapshot of each person's income, expenditures, assets, and liabilities through the annual information statement. Why isn't this data used to help legal heirs claim their inheritance?
Clearly, we already have the basic building blocks in place for a comprehensive solution. As Mr Kamath puts it, “The way we are connected with technology, it should have been a simple use of tech to efficiently solve the challenges in transmission. The process has to be automatic and simple.”
However, one final obstacle remains: the fear of fraud. Government officials often, demand multiple legal documents, indemnities and sureties out of concern for fraud. Is this fear significant enough to justify over Rs2 lakh crore remaining unclaimed? If we accepted the premise of fraud being a serious obstacle, the insurance business wouldn't function. A certain amount of fraud is inevitable; but it can be mitigated with robust verification systems, insurance coverage and fraud detection and response mechanisms like those used by insurance companies.
It is no longer an excuse to deprive Indians of efficient system to claim their rightful investments or inheritance!
Comments
pst123
1 month ago
I am a senior citizen and my experience of claiming refund of dividends/shares transferred to IEPF is dreadful and harrowing.Corporates don't entertain your queries.You are directed to RTA.RTAs insist on multiple KYC papers even when shares are dematerialised.Corporates/RTAs are more keen on transfering dividends/shares to IEPF.Transfer to IEPF means end of road to recovery.The whole process is so daunting.Are authorities more interested in freezing and declaring assets as benami.
Very Good analysis, few things I would like to say:
1. Why names of Private, Public or Foreign banks not mentioned, at least they should be named and shamed so that they don't do such things again.
2. There should be one "Indian Transmission of Assets act" that should supersede all the acts on inheritance, succession, probate, adult caretaker, transfer due to mental illness etc. instead of scattered in to many acts to complicate it.
3. Like India now has Chief of Defense that is above Indian Army, Navy and Airforce there should be something above all like RBI, SEBI, Insurance, etc. to ensure uniformity as politicians are just busy in election and Finance ministry will just present budget and not online monitoring to ensure uniformity.
4. Currently government works by law of opposite if you tell them its useful and change/create the act they will not work, but if you tell "Current government still dependent of British era Law that shows their slavery mindset" they will work promptly, also keep tagging their IT cells with such comments .
5. Why there should be form for not having nomination as not having nominations will increase unclaimed assets, it should be simple no nomination it will be as per will and if no will it will be with government.
6. If Arogya Setu can be created within few months of Covid (without knowing who created it as per RTI and stole our Aadhaar, Mobile and other details), above can also be done in few months if government has desire but as a wise man said in past "History will be kinder to me than media"
7. Is it possible to put all above data on blockchain to make everything publicly visible and same in real estate, hospitalization, school, colleges etc. complete details of a person on single click, there can be no privacy in assets to avoid tax evader and support taxpayers.
8. A special team should be created to refund all unclaimed asset and their increment be linked to net assets refunded (if net asset increase their pay reduce and if they reduce net asset their pay increase)
9. What about assets that are currently not under any regulator, are crypto regulated?
10. Single platform to invest in any asset and also sell any asset irrespective of whether regulator is RBI, SEBI etc.
I think if the amount is in banks or elsewhere govt must tell them to reach out to the people and address there and make an effort to disperse it to the next heir if no one is there
Nominations and inheritance rules should be aligned, including financial institutions, regulators and judiciary. The limits requiring judicial ruling needs to be revised annually based on inflation and published (this should be automatic without need for legislation). Administration and division of legacy assets should be done by trusts such as Asset Management Companies and not by individual family members(these days brothers cheat sisters - I can even refer to a Delhi High Court case. Even sons and daughters cheat parents. All public servants including SC judges should take notice of violations and act on them without the need for intervention by affected individuals. Can our public servants address these challenges, if not this Constitution of India is not even worth the paper it is written on - after all it is a living document if and only if it is enforced.
True, government should be serious enough to strengthen like IEPF. Mushrooming a new entity will be useless; if it doesn’t resort to ODR; similar case in Post Office. Mechanism and initiative, coupled with sincere effort from Government will be the game changer; otherwise our hard earned money will be locked for eternity.
Well i am a MFD and mfds can be given some sort of access or a database of these unclaimed deposits and funds under iepf and deaf.
This will help big time and can be a win win for both the parties.
If the finance ministry is listening then this is one more way of creating job opportunities
You have hit the nail.In my case ,my claim was accepted by IEPC and shares transferred to my demat account.Forget that it was after 14 months.However, I received no mail to this effect from IEPF.To claim subsequent dividends from the company,they are insisting on proof of transfer from IEPC.
Secondly , odd lots in physical forms are with all the investors.In many cases the cost to convert these in demat form is more than the value of shares.
In my case IEPF has acknowledged my claim and confirmed receipt of necessary documents from the company regarding unpaid/ unclaimed dividend pertaining to my shares in Feb 2022. Despite continuous follow up with IEPF and MCA , the claim is not settled . I received mail in response to my follow up that the settlement will happen soon. This was one year back
Last week, finance minister (FM) Nirmala Sitharaman asked public sector banks (PSBs) to make concerted efforts to mobilise deposits through special drives because deposits have been lagging behind loan growth. By July-end, deposits...
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1. Why names of Private, Public or Foreign banks not mentioned, at least they should be named and shamed so that they don't do such things again.
2. There should be one "Indian Transmission of Assets act" that should supersede all the acts on inheritance, succession, probate, adult caretaker, transfer due to mental illness etc. instead of scattered in to many acts to complicate it.
3. Like India now has Chief of Defense that is above Indian Army, Navy and Airforce there should be something above all like RBI, SEBI, Insurance, etc. to ensure uniformity as politicians are just busy in election and Finance ministry will just present budget and not online monitoring to ensure uniformity.
4. Currently government works by law of opposite if you tell them its useful and change/create the act they will not work, but if you tell "Current government still dependent of British era Law that shows their slavery mindset" they will work promptly, also keep tagging their IT cells with such comments .
5. Why there should be form for not having nomination as not having nominations will increase unclaimed assets, it should be simple no nomination it will be as per will and if no will it will be with government.
6. If Arogya Setu can be created within few months of Covid (without knowing who created it as per RTI and stole our Aadhaar, Mobile and other details), above can also be done in few months if government has desire but as a wise man said in past "History will be kinder to me than media"
7. Is it possible to put all above data on blockchain to make everything publicly visible and same in real estate, hospitalization, school, colleges etc. complete details of a person on single click, there can be no privacy in assets to avoid tax evader and support taxpayers.
8. A special team should be created to refund all unclaimed asset and their increment be linked to net assets refunded (if net asset increase their pay reduce and if they reduce net asset their pay increase)
9. What about assets that are currently not under any regulator, are crypto regulated?
10. Single platform to invest in any asset and also sell any asset irrespective of whether regulator is RBI, SEBI etc.
This will help big time and can be a win win for both the parties.
If the finance ministry is listening then this is one more way of creating job opportunities
Secondly , odd lots in physical forms are with all the investors.In many cases the cost to convert these in demat form is more than the value of shares.