Rs 78,213 crore in unclaimed bank deposits: Govt to speed up refunds

Finance Minister Nirmala Sitharaman on Tuesday called on financial sector regulators to accelerate the refund of unclaimed deposits to their rightful owners and to simplify Know Your Customer (KYC) processes for citizens, including Non-Resident Indians (NRIs). Chairing the 29th meeting of the Financial Stability and Development Council (FSDC), the Minister emphasized the need to ensure a citizen-friendly financial system with greater transparency, ease of access, and digital efficiency.

 

Reforms and KYC norms: 

 

The Finance Ministry highlighted that unclaimed bank deposits have soared 26% year-on-year, reaching Rs 78,213 crore as of March 2024, according to the latest RBI data. Deposits under the Depositor Education and Awareness Fund alone stood at Rs 62,225 crore by the end of March 2023.

 

These figures include:

 

• Dormant bank accounts
• Unclaimed shares and dividends (handled by IEPFA)
• Lapsed insurance and pension funds (managed by IRDAI and PFRDA)

 

Recognising this growing pool of unclaimed money, the Finance Minister instructed key regulatory bodies—RBI, SEBI, MCA, PFRDA, and IRDA—to launch district-level special camps aimed at returning unclaimed amounts to rightful owners quickly and efficiently.

 

She exhorted the Council to take proactive steps to ensure that citizens should have a seamless experience with respect to KYC processes across the financial sector, the finance ministry said in a statement.

 

There is a need for common KYC norms, simplification and digitalisation of the KYC process including digital onboarding for Non-Resident Indians (NRIs) including PIOs and OCIs, in the Indian securities market.

 

The minister urged the regulators and departments to expedite the process of refund to rightful owners of unclaimed amounts by holding special district-level camps.

 

“We must ensure that the interest of the common citizen is at the centre of our efforts. Refunds must be made expeditiously,” Sitharaman stated.

 

A push for Digital KYC

Another major focus of the meeting was the simplification and digitalisation of the KYC process across sectors. The Minister stressed the urgent need for a common KYC framework that works seamlessly across banks, insurance companies, pension agencies, and the securities market.

 

The KYC process, she said, must be especially accessible to NRIs, Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs) through easy digital onboarding mechanisms.

 

FSDC’s Broader Agenda: Cybersecurity, Financial Stability & Regulation

The FSDC also discussed macro-financial risks, emerging global trends, and India’s preparedness to maintain economic stability. It called for proactive efforts to strengthen the financial system’s resilience and emphasised the importance of inter-regulatory coordination to manage potential systemic risks.

 

One of the key proposals discussed was the creation of a dedicated cybersecurity strategy tailored for the financial sector, in line with the Financial Sector Assessment Programme (FSAP) 2024–25.

 

Key Takeaways from the FSDC Meeting:

Regulators directed to refund unclaimed deposits quickly, using local outreach.

 

Push for a unified, simplified KYC system, especially for NRIs.

 

Focus on cybersecurity enhancements in financial institutions.

 

Strengthening of inter-regulatory coordination for financial stability.

 

Review of regulatory responsiveness to past policy and budgetary decisions.

 

Who attended?

The meeting was attended by top officials including RBI Governor Shaktikanta Das, SEBI Chairperson Tuhin Kanta Pandey, and IFSCA Chairperson K Rajaraman, along with senior representatives from IRDAI, PFRDA, IBBI, and various central government departments.