FM asks regulators to expedite refund on unclaimed deposits, streamline KYC

Finance Minister 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

Finance Minister Nirmala Sitharaman on Tuesday asked regulators and departments to expedite the refund of unclaimed deposits to rightful owners and streamline the KYC process.

Chairing the 29th meeting of the Financial Stability and Development Council (FSDC) here, she emphasised that interest of common citizens to be kept in mind and expeditiously refund the claims of the rightful claimants.

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.

This drive is to be conducted in coordination with RBI, SEBI, MCA, PFRDA and IRDA along with banks, pension agencies, insurance companies etc, it said.

The unclaimed amounts comprise deposits in banks; unclaimed shares and dividends are managed by IEPFA; and unclaimed insurance and pension funds are with IRDAI and PFRDA respectively, it said.

Unclaimed deposits with banks have witnessed a 26 per cent jump year on year to Rs 78,213 crore at the end of March 2024, as per the latest RBI Annual Report.

The amount with the Depositor Education and Awareness Fund stood at Rs 62,225 crore at the end of March 2023.

The FSDC discussed issues related to macro-financial stability and India's preparedness to deal with them. During the meeting, the Council deliberated on the emerging trends from domestic and global macro-financial situation and stressed upon the need to be vigilant.

It recognised the need for proactive efforts to mitigate potential risks to financial stability while adopting adequate safeguards for financial system's resilience, it said.

The members decided to strengthen the inter-regulatory coordination for wider development of the financial sector, it said.

In light of the analysis of cybersecurity regulations, it said, sectoral preparedness, and the recommendations of Financial Sector Assessment Programme (FSAP) 2024-25, the FSDC considered strengthening the cyber resilience framework of the Indian financial sector through a financial sector-specific cybersecurity strategy.

The FSDC discussed issues relating to formulating a strategy for implementing past decisions and budget announcements, including establishing appropriate framework by regulators for evaluating and enhancing responsiveness of regulations and subsidiary instructions.

The Council also discussed measures to improve the reach and scope of factoring services and effective use of account aggregator networks.

The FSDC also took note of the activities undertaken by the FSDC Sub-Committee chaired by RBI Governor Sanjay Malhotra and the action taken by members on the pending past decisions of the FSDC.

Besides the RBI governor, Securities and Exchange Board of India (SEBI) Chairperson Tuhin anta Pandey, International Financial Services Centres Authority (IFSCA) chairperson K Rajaraman, and senior representatives of Insolvency and Bankruptcy Board of India (IBBI) and International Financial Services Centres Authority also attend the meeting.

The FSDC meeting was also attended by Minister of State for Finance Pankaj Chaudhary, Finance Secretary Ajay Seth, Secretary designate Department of Economic Affairs Anuradha Thakur, Financial Services Secretary M Nagaraju, Corporate Affairs Secretary Deepti Gaur Mukerjee, Revenue Secretary Arvind Shrivastava and other top officials of the finance ministry.