India’s forgotten wealth: Why `1 lakh cr of people’s savings is lying unclaimed?

India prides itself on being one of the world’s fastest-growing digital economies. The government speaks endlessly about financial inclusion, Jan Dhan accounts, digital banking, and fintech revolutions. Yet beneath this celebrated progress lies an uncomfortable and deeply troubling reality: more than Rs 1 lakh crore belonging to ordinary citizens is lying unclaimed across banks, insurance companies, mutual funds, and dividend accounts.

This is not merely a technical banking issue. It is a social, administrative, and ethical failure of India’s financial system.

According to recent data, unclaimed deposits in Indian banks alone have crossed Rs 74,580 crore, with nearly 87 per cent held by Public Sector Banks (PSBs). The State Bank of India (SBI) alone accounts for around Rs 19,329 crore, almost one-third of the total. Added to this are unclaimed insurance payouts, dormant mutual funds, and forgotten dividends, pushing the cumulative amount beyond Rs 1 lakh crore.

The obvious question is: How can so much public money simply disappear from public memory?

The answer exposes structural weaknesses in India’s banking culture.

For decades, banks aggressively opened accounts but rarely built systems to maintain long-term customer relationships. Millions of salary accounts became inactive after job changes. Fixed deposits opened decades ago were forgotten. Elderly citizens passed away without informing families about savings. Migrant workers and NRIs lost track of old accounts. Families misplaced passbooks, certificates, and records during relocations. In many cases, nominees were never registered properly.

The banking system, meanwhile, remained passive. Although RBI regulations require banks to contact dormant account holders, the reality is often far from satisfactory. Most customers receive little meaningful follow-up beyond occasional notices. Public sector banks in particular continue to suffer from outdated record management, weak customer engagement, and bureaucratic claim procedures.

The most alarming aspect is not merely the size of the unclaimed funds, but the accelerating pace at which deposits are becoming dormant. Transfers to the RBI’s Depositor Education and Awareness (DEA) Fund have surged dramatically in recent years. Before 2022, around Rs 4,500 crore annually was transferred. That figure jumped to over Rs 12,000 crore in FY23 and remained similarly high thereafter. This trend reflects something larger than forgetfulness. It signals growing fragmentation in modern financial life.

Today’s Indians maintain multiple bank accounts, digital wallets, investment apps, insurance policies, and online financial products. But there is still no truly integrated national asset-tracking system for citizens or their legal heirs. In a country where financial literacy remains uneven, expecting ordinary families to track decades-old accounts across institutions is unrealistic.

The irony is painful

Banks earn profits using public deposits, yet vast sums belonging to depositors remain idle for years. Even though the money is transferred to the DEA Fund or Senior Citizens’ Welfare Fund, many citizens are unaware that they retain the legal right to reclaim it at any time.

The government and RBI deserve credit for launching initiatives such as the UDGAM portal and campaigns like “Your Money, Your Right” and “100 Days 100 Pays.” These measures have helped lakhs of people trace forgotten deposits. However, these initiatives remain reactive rather than preventive.

The burden of recovery still falls disproportionately on citizens.

An elderly widow trying to recover her deceased husband’s fixed deposit often faces endless paperwork, repeated bank visits, nominee disputes, KYC complications, and procedural delays. In rural India especially, many families do not even know such funds exist or that they can legally claim them.

This raises a deeper ethical concern: Should citizens struggle to reclaim what is already theirs?

If banks possess Aadhaar-linked data, PAN records, mobile numbers, and nominee details, why are automated tracing systems still so weak? Why can’t dormant accounts trigger mandatory annual alerts to families and nominees? Why is there no unified “National Financial Assets Registry” accessible securely to legal heirs?

Technology exists. The real problem is institutional inertia. Public sector banks, which hold the overwhelming majority of unclaimed deposits, must also accept accountability. Their poor customer service, outdated archival systems, and slow claim settlement processes contribute directly to the problem. Financial inclusion cannot merely mean opening accounts; it must also mean protecting citizens’ ownership rights over their savings.

There is also a worrying economic dimension. Unclaimed deposits represent dead capital. At a time when millions struggle with rising healthcare costs, unemployment, and educational expenses, thousands of crores belonging to families remain frozen in institutional limbo.

For many households, recovering even Rs 50,000 from an old account could be life-changing.

The situation with insurance claims is equally disturbing. LIC alone reportedly has over 16 lakh unclaimed policies worth nearly Rs 3,727 crore. These are not abstract numbers. They represent the savings, security, and hopes of families who trusted public institutions.

India’s financial system must move beyond symbolic awareness campaigns toward structural reforms. Every bank and financial institution should be legally required to automatically notify nominees annually, simplify inheritance and claim procedures, digitally consolidate dormant assets, use Aadhaar and PAN integration responsibly for tracing rightful owners, and conduct proactive outreach instead of waiting passively for claims.

Most importantly, financial literacy campaigns must become part of public policy. Citizens should be encouraged to maintain updated nominee details, consolidate accounts, and document financial assets clearly for family members.

The growing mountain of unclaimed money is not just an accounting anomaly. It is evidence of disconnect between citizens and institutions that are supposed to safeguard their wealth.

A modern economy cannot allow people’s lifetime savings to vanish into bureaucratic silence.

The money lying idle in banks and financial institutions is not “abandoned wealth.” It belongs to workers, pensioners, parents, widows, migrants, and families. It belongs to the people. And returning it should not be treated as a favour.

ABOUT THE AUTHOR

Dr Muchukota Suresh Babu

Dr Muchukota Suresh Babu