According to the latest research by Share Samadhan, an investor education and protection fund (IEPF) consultant, India's unclaimed deposits and investments totalled around Rs 4 lakh crore. This comprises Rs 2,38,000 cr worth of physical shares, Rs 62,225 worth of unclaimed bank deposits, Rs 80,000 cr worth of provident funds (PF), and Rs 24,000 cr worth of mutual funds. Despite regulatory attempts to promote awareness and improve the claims procedure, a significant fraction of these assets go unclaimed, causing issues for both individuals and financial institutions.
Stocks, dividends, and bonds left unclaimed for seven years or longer are shifted to the IEPF, established by the Companies Act of 1956. Similarly, funds and accrued interest dormant in bank accounts for more than ten years are transferred to the RBI Depositor Education Awareness Fund (DEA Fund).
Unclaimed deposits refer to funds held in bank accounts that have not been accessed for at least 10 years. These inactive accounts, where neither withdrawals nor transactions have occurred, are termed unclaimed deposits.
Vikash Kumar Jain, co-founder & director at Share Samadhan said, “Unclaimed deposits and investments are a major issue in India, with many people and organizations unaware of their legitimate ownership.”
Several causes contribute to India's high number of unclaimed deposits and investments. One factor is a lack of information among individuals regarding their rights to these assets, particularly in cases of inheritance or forgotten investments. “Furthermore, changes in personal details such as address or contact information may cause users to lose track of their investments over time. The claims process's complexity and regulatory barriers discourage people from filing claims as soon as possible. Addressing these issues needs a joint effort from regulators, financial institutions, and citizens to promote awareness, streamline procedures, and assure timely retrieval of unclaimed funds,” Jain said.
Claiming unclaimed savings and investments in India necessitates aggressive measures, correct documentation, and knowledge of one's claims. Individuals who understand the process and use available tools can reclaim their rightful assets and contribute to financial empowerment and security.
Claiming unclaimed deposits and investments requires numerous processes. First, individuals must determine whether they have any unclaimed assets, such as bank deposits, stocks, debentures, or mutual funds. This can be accomplished by accessing online databases maintained by regulatory authorities such as the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi). Once recognized, individuals must provide the requisite documentation to the financial institutions or authorities, such as proof of identity, proof of address, and relevant account information. The method may differ based on the asset and institution involved, but prompt action and good documentation are critical for a successful claim.
Alay Razvi, Partner - Accord Juris LLP, Hyderabad, said, “One can claim the said amount by updating or submitting their KYC details and other relevant documents but in the case of a deceased member, the legal heirs will need to submit succession certificate, death certificate, and documents about the account/ policy held by the account holder. To assist the account holder, the govt as well as private companies have launched portals to retrieve the data unlike before.”
To streamline the process for individuals seeking to reclaim such funds, the Reserve Bank of India (RBI) has recently introduced the unclaimed deposits- gateway to access information (UDGAM) portal. This platform allows any member of the public to conveniently search for their unclaimed deposits across various Indian banks in one centralized location. Users can access this service by providing details such as the account holder's name, permanent account number (PAN), voter ID, passport number, or date of birth.
Similarly, unclaimed investments encompass various financial instruments like shares, dividends, and debentures that have remained dormant for seven years or more. According to the provisions outlined in the Companies Act, 2013, such unclaimed investments are transferred to the Investor Education and Protection Fund (IEPF). Interested individuals can conduct online searches for these unclaimed investments through the IEPF database by inputting relevant account numbers and folio numbers.
Vipul Jai, Partner, PSL Advocates and Solicitors said, “Conversely, unclaimed insurance amounts pertain to insurance policies where claims have not been initiated for a period exceeding six months after the settlement date. These unclaimed insurance sums remain within the custody of the insurance company until claimed by the policyholder. To facilitate the retrieval process, individuals can search for such claims on the respective websites of insurance companies. Basic details such as the policyholder's name, date of birth, policy number, and PAN are typically required for this search, as there is no centralized database available for such inquiries.”