The interesting thing about our advocacy is that all regulators and ministries know that people are struggling to claim their inheritance. They also worked on improving the system, in spurts, but just didn’t do enough. Our PIL lists numerous RBI circulars and guidelines asking banks to be more sensitive or make an effort to trace the rightful heirs. There is also a Supreme Court judgment which clearly states that the RBI has been authorized by Parliament to adopt policies or issue directives having the force of law.
In this case, the lack of resources is not an excuse either. The interest on Rs82,000 crore of people’s money is enough to secure world-class technology and resources to create something viable, without dipping into public funds or government resources.
The money remains unclaimed because the legal heirs are often unaware of the existence of these deposits or assets, or because it is impossible to find them. In many cases, the legal heirs, especially those residing abroad, have simply waived their legitimate rights due to painful and different processes for each entity and each bank.
Thus my PIL is not limited to recovering these sums but also pleads to create a more humane system allowing the heirs of deceased persons to claim what is rightfully theirs. Current rules require a probate or probate certificate from the court even where there is a valid, undisputed will or family agreement with benefits. It is expensive, time-consuming and often unaffordable for ordinary Indians.
Here’s a quick breakdown of funds with various regulators. Unclaimed money from the provident fund, insurance, post office and government savings scheme is transferred to the Senior Citizen’s Welfare Fund (SCWF); unclaimed bank deposits with interest are transferred to the Depositors Education and Awareness Fund (DEAF) with the RBI. At the end of March 2021, DEAF had Rs 39,264.25 crore in unclaimed deposits and interest. Fixed deposits, bonds, interest and unclaimed corporate dividends are paid into the Investor Education and Protection Fund (IEPF), which had Rs 4,100 crore at the end of March 2020. Mutual Funds inactive (Rs 17,000 crore), insurance (Rs 15,000 crore), various provident funds and government savings schemes alone could exceed Rs50,000 crore; but no clear figures are available.
How will a centralized online database help you?
A centralized database will certainly help the rightful heirs of deceased people to search for details and claim their inheritance. The big concern is that such a large database attracts fraudsters and identity thieves to steal money. There are legitimate privacy concerns about what data will be exposed publicly and also whether we can create a quick and inexpensive verification process.
We don’t have all the answers right now; but government sits on people’s money and it must bring together the best minds and technology to create a system that transcends the silos of separate ministries (finance, corporate affairs, law/courts), regulators and their variable rules for give us our fair trumps. A few facts would help us find a solution:
1. RBI, the Securities and Exchange Board of India (SEBI) and IRDAI have ordered banks, mutual funds and insurers to post the names of those with unclaimed deposits on their websites. But the legal heirs are often unaware of the existence of these. We ask each of these authorities to also make every effort to reach dormant/inactive account holders or their proxies.
2. Over the past five years, regulators as well as lenders have had access to multiple streams of data (social media profiles, Google, UIDAI/Aadhaar, telecom users and other customer databases, legally and illegally) for a easy loan and retrieval. Despite access to massive resources in the form of unclaimed funds, no effort is made to use technology to find savers and/or their heirs.
3. Many banking websites provide information about unclaimed deposits, but it is difficult to research or make a valid claim based on the information. While RBI urges banks to contact inactive account holders, it has refused to put in place SOPs to make valid claims. The result is that each bank, and often individual bank managers, set their own rules and requests for the release of funds (probate, unrelated party bonds, indemnities, affidavits, mandatory fixed deposits – Moneylife Foundation encountered a variety of atrocities to deny legitimate money).
5. Problems with making valid claims have opened up a business opportunity for private entrepreneurs who put the information of millions of investors on private websites. Some of them charge fees to search the database, others allow free name search and detail access fees and all charge substantial fees to help claim the money. Doesn’t that amount to an unfair and heavy inheritance tax? Private entities also offer assistance in the recovery process, charging between 20% and 50% of the amount of money recovered.
India has advanced by leaps and bounds in technology. We have public service platforms like the UPI payment system (which required people to get biometric identification, Aadhaar, with all its flaws). We have streamlined sensitive passport issuance, online business filings (MCA-21) and online tax collection through technology. We use apps and websites for many things, from ticketing to accessing vaccine certificates. We cannot be in the dark ages when it comes to the inheritance rights and legitimate claims of ordinary people. A government that promised ‘ease of living’ owes us to use our resources (interest on unclaimed private money) to give us an effective, world-class, foolproof, technology-based and timely solution to claiming this which is legitimate ours.