Supreme Court Seeks Response from RBI and Government on Unclaimed Funds of Deceased Individuals

The Supreme Court on March 18 raised questions to the Union government and the Reserve Bank of India regarding the lack of a mechanism that allows legal heirs to access information about unclaimed bank accounts of deceased individuals. 

The court examined whether the absence of a centralised system makes it difficult for heirs to identify and claim funds that legally belong to them.

Court Flags Challenges Faced by Legal Heirs

During the hearing, the petitioner argued that legal heirs are often unaware of the number of bank accounts or financial investments held by the deceased. Without proper documentation, tracing these assets becomes extremely difficult.

The petition suggested creating a centralised platform that would allow legal heirs to search for information related to dormant or inoperative accounts. The court considered whether the lack of such a system creates structural barriers for families trying to claim legitimate funds.

Concerns Over Privacy and Fraud Risks

While examining the matter, the court also acknowledged concerns about data privacy and possible misuse. It noted that making sensitive financial information widely accessible could lead to fraud, with individuals falsely claiming to be legal heirs.

The Union government also expressed similar concerns. Officials pointed out that any mechanism for disclosure must carefully balance transparency with the need to protect financial data and prevent abuse.

Existing Rules for Unclaimed Deposits

According to the government, bank deposits that remain inactive for ten years are transferred to the Depositor Education and Awareness Fund. This fund is managed to promote financial literacy and awareness initiatives.

Authorities clarified that if a legitimate claimant comes forward with proper documentation, the money can still be refunded from the fund. Banks are required to verify claims carefully before releasing such funds.

Scale of Unclaimed Funds in India

The issue has gained attention because of the growing volume of unclaimed financial assets. Submissions made before the court indicated that the total value of unclaimed funds across different categories exceeds ₹1.5 lakh crore.

These funds include deposits transferred to the Depositor Education and Awareness Fund, the Investor Education and Protection Fund and the Senior Citizens’ Welfare Fund.

Also Read: RBI Injects ₹48,014 Crore Liquidity Through VRR Auction into Banking System!

Conclusion

The Supreme Court has asked the Union government and the Reserve Bank of India to submit their responses within four weeks. The matter is expected to be heard again on May 5. 

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