Most of us are guilty of having several idle bank accounts which are relegated to the back of the mind, along with the small amounts lying idle in them. It’s the same with dividends which are sent to old addresses because we forgot to inform the registrar and transfer agents while hopping cities.
Though these amounts may be insignificant to the investor, they add up to a substantial amount. That is probably why there is a concerted move from the RBI, SEBI and other regulators to make it easier for investors to reclaim their assets.
These measures could help investors trace their long-forgotten assets, if they so desire, but the main problem why unclaimed assets are high is due to the difficulties faced in claiming financial assets of the deceased. Many heirs prefer to just give up on their claims, spooked by the red tape involved. The solution is to be more empathetic when dealing with this process and to be alive to the problems faced by senior citizens.
Unclaimed balances
While the total value of unclaimed balances across asset classes is large, of concern is that they are continuing to grow in recent years.
Bank deposits are the preferred saving choice of most Indian households; and it is therefore not surprising that the largest unclaimed balances are lying with banks. The amount outstanding in the Depositor Education and Awareness (DEA) fund towards the end of March 2025 was an enormous ₹97,545 crore. The balance is up 24 per cent from the outstanding amount of ₹78,212 in the previous year.
As the equity culture grows, unclaimed shares and dividends are also on the rise. A parliamentary response revealed that ₹8,108 crore was lying in SEBI’s Investor Education and Protection fund towards unclaimed dividend, as of March 2024. According to Capitaline database, at least ₹12,000 crore is being held as shares in unclaimed suspense account in March 2025.
Surge in mutual fund investments too is accompanied by increasing unclaimed balances with fund houses. Unclaimed dividend lying with mutual funds amounted to ₹918 crore towards the end of FY24, while unclaimed redemption amount was ₹402.8 crore. The insurance regulator, IRDAI, has reported that ₹20,062 crore was unclaimed amount across insurers as of March 2024.
The Employees’ Provident Fund, which is another area where savings are pooled, reported unclaimed balances in inoperative accounts of ₹8,505.23 crore in FY24, up from ₹1,638.37 crore in FY19.
The numbers enumerated above add to a whopping ₹1,47,540 crore. But the list is far from complete. There must be such balances lying in other investment vehicles such as REITs, InVITs, company fixed deposits, small savings etc, which could increase the number manifold.
Regulatory efforts
There have been a slew of regulatory measures taken in recent years to speed up the return of these unclaimed balances to investors.
The RBI has stipulated that the facility of updating the KYC for activating inoperative accounts should be available at all bank branches, identification of customers through video be facilitated and authorised business correspondents can be used to activate inoperative accounts. The UDGAM portal further allows access to all the funds transferred to the DEA fund. Banks are also told to put out the names of unclaimed deposits on their websites.
Unclaimed shares and dividend are transferred to the Investor Education and Protection Fund if unclaimed for seven years. and investors can claim their assets through the website.
IRDAI specifies that insurers must transfer policy amounts not claimed for more than 10 years to Senior Citizens Welfare Fund. The beneficiaries and policyholders then have 25 years to claim the dues.
Where does the problem lie?
Despite these regulatory efforts, unclaimed assets are continuing to mount. Why is it so?
Unclaimed balances in banks, stock market and pension funds arise due to two main reasons. One, due to investors forgetting to close accounts or redeem their money and two, assets not claimed by heirs on the death of the investor.
The facilities made available by the regulators can help in instances where the investor has been lax in closing accounts or informing the RTA about change of address etc. Given increased digitisation of financial services and the capture of nearly all yearly income by the Income Tax Department, it is quite likely that instances of dormant accounts and unclaimed interest, dividend etc will move lower in the years ahead.
But there is a real problem in case of transmission of financial assets of the deceased. Banks require numerous documents including the death certificate, photograph and KYC of all legal heirs, letter of disclaimer, letter of indemnity, besides asking heirs to fill numerous forms.
Many senior citizens hold shares in physical forms and the paperwork needed to convert these to demat forms is so complex that most heirs are likely to just let it go. With many of us Indians using different versions of our names in different KYC documents, expanding the initials in some instances and retaining the initials in others, the problems facing legal heirs tend to compound.
The way out
There is a need for the financial services industry to treat requests for transmission of assets of the deceased with less suspicion and more empathy. They need to treat instances such as spelling mismatches in the documents of the deceased (which is very common) or signature mismatches, less stringently. This needs to be communicated to all those who are in the customer service department. This could make the heirs more willing to engage with the banks or RTAs to claim their dues.
Bank accounts, mutual fund folios, insurance and pension accounts can be categorised as high-, medium- and low-risk based on the profile of the investor. For instance, if the bank account is the salary account of an employee at a reputed company, it can be classified as low-risk. The KYC procedures, forms to be filled etc be less stringent in low-risk accounts and vice versa for high-risk accounts.
The forms that need to be filled for the process can be further simplified. A common portal for claiming the financial assets of the deceased can be considered. This portal can be updated on the death of the investor so that all the accounts can be frozen. The required documents can be uploaded at one place and can be accessed by all RTAs, banks, insurers, MFs, PFRDA etc. If the goal is to bring down the extent of unclaimed assets, regulators need to understand the hardships being faced by investors and try to iron them out
Published on July 26, 2025
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