In a significant move, the Supreme Court of India recently called upon the Union Government and various financial regulators to respond to a public interest petition. This petition advocates for the establishment of a comprehensive digital platform, designed to empower citizens to effortlessly track and retrieve all their financial assets – be they active, dormant, or unclaimed – held across institutions governed by the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), and the Insurance Regulatory and Development Authority of India (IRDAI).
A bench comprising Justices Vikram Nath and Sandeep Mehta has specifically requested replies from key bodies, including the Union of India, the Ministry of Consumer Affairs, the RBI, SEBI, IRDAI, the National Savings Institute, the Employees’ Provident Fund Organisation (EPFO), and the Pension Fund Regulatory and Development Authority (PFRDA).
The petition, brought forth by social activist Aakash Goel, highlights the urgent need for a centralized system. This system would assist individuals in locating and recovering their scattered or inactive financial assets. The plea argues that a staggering amount of wealth – including funds in dormant bank accounts, unclaimed dividends, matured insurance policies, unpaid provident fund balances, and unredeemed mutual fund units – is currently spread across numerous financial institutions without a cohesive platform for citizens to track or reclaim it.
The Challenge of ‘Trapped Wealth’
Senior advocate Mukta Gupta, representing the petitioner, emphasized that despite the Delhi High Court previously recognizing the severity of the problem, authorities have not yet acted on the petitioner’s concerns. “The High Court acknowledged the gravity of this issue but deferred to the authorities to formulate a policy. Regrettably, no progress has been made since then, leaving the funds of millions of ordinary citizens inaccessible in banks and insurance companies,” stated Ms. Gupta.
Following the issuance of the notice, the Supreme Court has mandated the Centre and all relevant financial regulators to submit their responses within four weeks. The case is scheduled for further deliberation after this period.
Earlier in January, a Division Bench of the Delhi High Court had concurred that the issue of dormant and unclaimed financial assets represents a ‘serious concern affecting millions of depositors and investors.’ However, the High Court chose not to intervene judicially, stating that the matter fell within the purview of executive and policy-level decision-making.
The petition reveals startling figures: over 9.22 crore bank accounts nationwide are currently inoperative, each holding an average balance of ₹3,918. Moreover, it highlights that unclaimed financial assets, exceeding an astounding ₹3.5 lakh crore, are languishing idly across various institutions including banks, mutual funds, insurance companies, provident funds, and small savings schemes.
The plea attributes this accumulation of unclaimed financial assets primarily to the lack of a centralized digital portal. Such a platform, accessible across all regulated entities, would allow individuals or their nominees, after completing KYC (Know Your Customer) verification, to access comprehensive details of their financial assets, including bank deposits, shares, dividends, insurance, and pension funds.
The petitioner further highlighted that a significant portion of these funds belongs to deceased individuals, whose legal heirs remain oblivious to their existence. This is largely due to absent nominee details or the absence of a unified system capable of tracing these assets. The petition contends that this situation has led to an enormous pool of ‘trapped wealth,’ inaccessible to its rightful beneficiaries and contributing minimally to the national economy.
The plea firmly asserts that fundamental rights, including the right to property (Article 300A), the right to information (Article 19(1)(a)), and the right to dignity and welfare (Article 21), collectively obligate the state to proactively ensure that these unclaimed assets are made accessible and returned to their legitimate owners.
The petition specifically calls for the creation of a secure, Aadhaar-linked, and e-KYC-enabled digital platform. This innovative platform would consolidate information on all financial assets held by individuals and their nominees across different regulatory bodies. Additionally, the plea seeks directives to make it mandatory for financial institutions to record nominee details for every account or investment, and to establish a well-defined, time-bound system for efficiently handling claims and resolving grievances.