Explainer | How government can return unclaimed money to people

When Prime Minister Narendra Modi recently spoke of “trust” as the central idea behind the new drive to return unclaimed financial assets, the political message was unmistakable. But beneath that rhetoric lies a vast pool of dormant money, regulatory complications, and a government attempt to demonstrate administrative efficiency ahead of a major national election.

Finance Minister Nirmala Sitharaman, quoting Modi’s speech, laid out the scale. In Indian banks alone, about Rs 78,000 crore of public money lies unclaimed. Insurance companies hold another roughly Rs 14,000 crore. Mutual Funds add about Rs 3,000 crore. “We don’t know who this money belongs to,” Modi said. “It is just lying there.”

The Prime Minister framed the effort as a moral duty: money “belonging to the poor and middle-class” must be traced back to its rightful owner. So far, special identification camps have been held in almost 500 districts, and Sitharaman says “several thousands of crores” have already been returned.

The political framing is clear. But what does this scheme actually do, and how does the system work behind the scenes?

Where this money comes from

India’s financial system has accumulated unclaimed assets for many reasons:

* Bank accounts that have not seen a transaction for ten years
* Depositors who died without nominees
* Insurance claims never filed
* Mutual Fund folios abandoned after address or bank changes
* Dividends left untouched, later causing shares to be transferred to statutory authorities

Regulators require banks, insurers, and fund houses to periodically sweep such dormant accounts into centralised funds. The money remains payable to the owner, but the trail often grows faint because documentation is missing or outdated.

By the government’s own estimate, unclaimed assets across the entire financial sector may exceed Rs 1.04 lakh crore. Modi referred to the problem not as a technical glitch but a breach of trust: citizens lose track of their savings because institutions or families fail to maintain paperwork, and correcting this is now a state-led responsibility.

Government’s discovery drive

The current campaign – internally described by officials as a national repatriation effort – combines district-level camps, regulator-operated search portals, and coordination between the Union government and financial institutions.

Although Modi did not give a formal name during his speech, Sitharaman has earlier described the exercise as a citizen-rights initiative aimed at “ensuring the rightful owner receives what is due”.

District camps

Special camps in nearly 500 districts act as walk-in centres where citizens can:

• Check whether any assets in their name are lying unclaimed
• Upload or present documents
• Receive support for claims, especially in rural areas where digital literacy remains low

State governments have been pulled into the process too. In Delhi, for example, the administration has worked with local banks to host these events.

The government says thousands of crores have already been returned through this method.

Digital architecture behind the scheme

While the camps provide visibility, the actual engine of the scheme is a cluster of online platforms run by sectoral regulators. These portals allow citizens to search for dormant accounts, match personal details, and initiate claims.

Unclaimed bank deposits: UDGAM

The Reserve Bank of India’s UDGAM portal (Unclaimed Deposits – Gateway to Access Information) is the most critical component for bank accounts.

It covers more than 30 banks and works like a meta-search engine for dormant deposits. A user registers with basic details, completes OTP verification, and searches by name, date of birth, or bank selection. If a match is found, the system issues a UDRN (Unclaimed Deposit Reference Number), which the claimant then takes to the bank branch.

Deposits inactive for over ten years are transferred to the RBI’s Depositor Education and Awareness Fund. They remain fully claimable, including accumulated interest.

Insurance claims: Bima Bharosa

IRDAI’s Bima Bharosa portal allows searches across life and non-life insurers. Users can look up unclaimed amounts by policy number, name or PAN. Once identified, claimants approach the insurer with KYC documents and, where relevant, death certificates or succession documents.

Mutual Funds: MITRA, CAMS and KFintech

SEBI’s MITRA platform and the transfer agents CAMS and KFintech help citizens locate unclaimed Mutual Fund folios, unredeemed dividends, or unpaid Income Distribution cum Capital Withdrawal amounts.

Owners enter PAN, folio number, or name, and then submit documents to the fund house or transfer agent for verification.

Shares and dividends: IEPF Authority

Unclaimed dividends older than seven years and the underlying shares eventually move to the Investor Education and Protection Fund. The IEPF portal allows a search and lets investors apply for the return of their shares after submitting proof of ownership.

How claims are processed

Although different regulators run different platforms, the verification process across the system broadly follows a single pattern:

1. Search for the asset on the relevant portal
2. Identify the financial institution that currently holds the money
3. Submit KYC documents (PAN, Aadhaar, and address proof)
4. Provide proof of ownership (passbook entries, policy documents, folio statements)
5. For heirs, provide succession certificates or wills
6. After verification, the institution transfers the money directly to the claimant

There are no fees for raising a claim. There is no expiry date either.

Banks get reimbursed by the RBI from the DEA Fund after they pay the claimant. Insurers and fund houses do the same from their own regulated pools.

Why Modi keeps calling this a matter of trust

The Prime Minister framed the initiative not as a financial housekeeping exercise but as a demonstration of good governance. “This is not just about the return of asset,” he said, “this is about trust.”

The political logic is simple. A government that tracks down people who forgot about their own money can claim an unusual form of credibility. The fact that the largest share belongs to poor and middle-income citizens strengthens the narrative that the state is actively correcting long-standing inefficiencies.

This also responds to a structural problem: India’s financial system has seen recurring criticism over the opacity of dormant accounts, the difficulties heirs face, and the lack of unified databases.

The new architecture – in particular UDGAM, MITRA and Bima Bharosa – is designed to minimise future accumulation by encouraging regular checks and updated nominations.

What remains difficult

Despite the digital improvements, several challenges remain:

• Millions of older accounts lack nominees
• Many families are unaware of dormant insurance policies
• Legal heirship still requires paperwork that rural households struggle to produce
• A large portion of unclaimed assets belongs to migrants or deceased workers who left no records

The government’s camp-based approach is meant to soften these friction points, but it cannot fully eliminate them.

Long-term picture

If the system works as intended, it should gradually reduce the pool of dormant money. Regulators want citizens to:

• Keep accounts active with small periodic transactions
• Update contact details and banking information when moving
• Add or correct nominees
• Use the portals periodically to check for dormant assets

As Grok explained, the architecture is designed to repatriate assets now and prevent future dormancy. The wider unclaimed pool across sectors may exceed Rs 1.84 lakh crore, so the full exercise could take years.

For now, though, the government is using administrative power, digital tools, and political messaging to tackle a structural issue and convert it into a narrative of trust-building.

If the institutional coordination holds, this could become one of India’s largest financial clean-up exercises — and perhaps one of the few that returns money directly to citizens instead of collecting it from them.