Rs 2 l Cr locked-up, says a report by Moneylife Foundation
An estimated Rs2 lakh crore of our money - belonging to people like you and me - is locked up with the government, reveals a report by Moneylife Foundation which as unveiled by the veteran banker, KV Kamath here on Wednesday
Mumbai, August 29: An estimated Rs2 lakh crore of our money - belonging to people like you and me - is locked up with the government, reveals a report by Moneylife Foundation which as unveiled by the veteran banker, KV Kamath here on Wednesday.
The report on asset transmission notes that while part of this could be due to disputes, a large part is due to people not documenting their savings and not informing their heirs about the details of these savings. Given that no centralised, searchable database exists, the challenge becomes even more significant for the heirs.
The Report highlights the urgent need for systemic reforms to address the complex and often inaccessible processes involved in reclaiming these assets.
Generally, unclaimed assets accrue from dormant bank accounts, maturity proceeds of policies idling in insurance companies, life savings of individuals locked up in bank accounts, equity and bond investments, provident fund accounts, mutual fund investments, post office savings as well as dividend, interest and other corporate benefits that have not been cashed for years.
They remain in pools such as the Reserve Bank of India (RBI)'s Depositor Education and Awareness Fund (DEAF), which had Rs78,213 crore at the end of March 2024. The Investor Education and Protection Fund (IEPF) told the Lok Sabha about Rs5,714 crore in corporate benefits, which did not include the value of shares. As of 1 August 2024, IEPF's shareholding in these companies is valued at a whopping Rs82,199, reveals information shared by Fee Only Investment Advisers LLP, founded by former banker Harsh Roongta.
Unclaimed insurance, post office savings, and provident fund money are transferred to the Senior Citizens' Welfare Fund (SCWF). The insurance regulator has admitted to transferring nearly Rs10,000 crore (after remaining unclaimed for 10 years). However, various sources quoted in the Report have estimated unclaimed insurance funds to be Rs22,000 crore to Rs27,000 crore. Similarly, bankbazar.com has estimated unclaimed funds with the Employee Provident Fund Organisation (EPFO) to be Rs27,000 crore. In general, precise data on the extent of unclaimed funds is severely lacking.
Among the challenges that nominees and legal heirs face when claiming assets of the deceased are inconsistent processes for nomination, lack of standard operating procedures, poor searchability of data, lack of knowledge and harassment by officials, which lead to unreasonable delays in settlement of claims.