₹1 Lakh Crore Unclaimed Funds: Supreme Court Seeks Answers On Centralised Tracking System

The bench of Justices Vikram Nath and Sandeep Mehta directed the authorities to file updated counter affidavits within four weeks, posting the matter for further hearing on May 5.

The plea has been filed by financial journalist Sucheta Dalal, raising concerns over the lack of a unified mechanism for legal heirs to access unclaimed funds across banks, insurance policies, shares and other financial instruments.

Appearing for the petitioner, Advocate Prashant Bhushan argued that a significant portion of such funds remains unclaimed because heirs are often unaware of the existence or location of these assets.

“There are multiple government-controlled funds where this money is transferred, including the Depositors Education and Awareness Fund, the Investor Education and Protection Fund, and the Senior Citizens Welfare Fund. Together, these hold over ₹1 lakh crore,” Bhushan submitted.

He emphasised that the absence of a centralised, searchable database is the core issue. According to him, families frequently lack access to basic information about accounts held by deceased relatives, making it difficult to initiate claims.

Bhushan urged the Court to direct the creation of a unified platform that would allow legal heirs to trace such assets. He also suggested simplifying claim procedures by reducing reliance on lengthy probate processes and instead permitting claims based on wills, indemnity bonds and public notices.

The Bench, however, expressed reservations about the potential for misuse of such a system. It flagged concerns that making such data accessible could open the door to fraudulent claims.

“Providing access to this kind of data may give rise to another set of fraudsters who will start filing claims,” the Court observed, cautioning against unintended consequences of a centralised database.

Opposing the plea, Additional Solicitor General (ASG) N Venkataraman submitted that the issue falls within the policy domain of the government. He assured the Court that the Centre would place its position on record through a fresh affidavit.

Counsel for the RBI argued that existing safeguards already address many of the concerns raised. It pointed to measures such as Know Your Customer (KYC) norms, mandatory nomination requirements and centralised KYC systems, which can be linked to Aadhaar.

The RBI further maintained that banks hold such funds in trust and cannot release them without proper legal verification. It opposed any dilution of due diligence requirements, stating that claims cannot be allowed solely on the basis of indemnity bonds without adequate scrutiny.

During the hearing, the Court also engaged with the broader issue of whether legal heirs should be granted access to information about accounts held by deceased individuals. While acknowledging the practical difficulties faced by families, it remained cautious about balancing transparency with privacy and fraud risks.

Noting that key aspects of the issue had not been fully addressed in earlier responses, the Court directed both the Centre and the RBI to file comprehensive affidavits addressing the feasibility, safeguards and legal framework surrounding such a system.

As the hearing concluded, Bhushan pointed out that authorities had earlier indicated that a centralised database would be operational by July 2023, but no such system has been implemented so far.

“Let fresh affidavits come, then we will take a call,” the Bench said.

Notably, in April 2023, the Court had sought the Ministry of Finance's response in a plea by journalist Sucheta Dalal pertaining to unclaimed money of investors and depositors taken by various regulators and remaining inaccessible to rightful legal heirs. The, then, CJI Chandrachud and Justice JB Pardiwala's bench had noted that while the Ministry of Corporate Affairs had filed a reply, the Finance Ministry had not.

Previously, in 2022, the Supreme Court bench of Justices Abdul Nazeer and JK Maheshwari had issued notice in the plea in August.

The plea sought a direction to the Central Government to take appropriate steps, in a time-bound manner, towards creation of a centralized database providing information about bank accounts, insurance, post office funds etc. held by deceased account holders. It had further sought establishment of a procedure for dealing with claims of legal heirs qua bank deposits, insurance, post office funds etc., that eliminates unnecessary litigation.

Dalal had also sought an urgent direction to ensure that unclaimed funds of the public that get transferred to Government owned funds viz. the Depositor’s Education and Awareness Fund (DEAF), Investor’s Education and Protection Fund (IEPF) and Senior Citizen’s Welfare Fund (SCWF) on the ground that the same were not claimed by the legal heirs /nominees are made available to said legal heirs/nominees by providing information of holders of inoperative/dormant accounts on a centralized online database.

The plea, filed under Article 32 had argued that even those banks that do offer the data on deceased account-holders fail to serve the intended purpose qua those legal heirs who are unaware of the very existence of a bank account. Referring to the already existing time-consuming and cumbersome process that legal heirs have to go through while making claims after the death of an individual, the petition submitted that a centralized database is necessary to ensure that families/heirs/nominees in dire need of funds are not deprived of the same. Dalal had relied on a Circular issued by RBI in June 2005 to the Chairman/CEOs of All Scheduled Commercial Banks emphasizing on the need for simplification of procedure with respect to deceased depositors, stating that the tortuous procedures applicable to the family members of a deceased depositor caused considerable distress to such family members.

Case Title: Sucheta Dalal v. Union of India