As Indian households financialise their wealth, one side-effect seems to be the pile-up in unclaimed assets (after the owner of the asset has passed away). As per Moneylife, India now has Rs 2 trillion ($25 bn) of such assets [that’s almost 0.7% of India’s GDP] and this number is growing at 15-20% per annum: “Generally, unclaimed assets accrue from dormant bank accounts, maturity proceeds of policies idling in insurance companies, life savings of individuals locked up in bank accounts, equity and bond investments, provident fund accounts, mutual fund investments, post-office savings as well as dividend, interest and other corporate benefits that have not been cashed for years.
They remain in pools such as the Reserve Bank of India’s (RBI’s) depositor education and awareness fund (DEAF), which had Rs 78,213 crore at the end of March 2024. The ministry of corporate affairs told Lok Sabha about Rs 5,714 crore in corporate benefits, which did not include the value of shares.”
In fact, nobody actually knows just how big the pile of unclaimed assets as there is no consolidated source of such data in India.
So why is this pile-up taking place? Moneylife says: “Among the challenges that nominees and legal heirs face when claiming assets of the deceased are inconsistent processes for nomination, lack of standard operating procedures, poor searchability of data, lack of knowledge and harassment by officials, which lead to unreasonable delays in settlement of claims.”
What can be done to improve things? “Moneylife Foundation recommends a tech-based solution as a unified platform or searchable database for claimants to access information across various financial assets. Expanding on Securities and Exchange Board of India’s (SEBI’s) idea for centralised reporting of death, the report also recommends a centralised repository for death registration. Such an online repository would maintain and verify information related to births and deaths. This will be a big step in ensuring speed and eliminating the need for heirs (once authenticated) to submit multiple death certificates to different agencies. It will also allow each agency to confirm and cross-verify information for the transmission of assets.
Other recommendations include establishing detailed standardised operating procedures across all financial sectors and a list of acceptable documents to guide claimants, whether as nominees or legal heirs.
Developed countries have a centralised process to ‘reunite unclaimed property with the rightful owner’. It is the opposite in India, where every hurdle is placed in the way of claims.”
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