SEBI Partners with DigiLocker to Reduce Unclaimed Financial Assets: A Game-Changer for Investors

Over the years, the Indian financial system has faced a rising issue of unclaimed assets, including shares, mutual fund units, bank deposits, and insurance policies.

In a significant move aimed at reducing unclaimed financial assets and improving accessibility to investment holdings, the Securities and Exchange Board of India (SEBI) has issued a circular titled "Harnessing DigiLocker as a Digital Public Infrastructure for Reducing Unclaimed Assets in the Indian Securities Market." This initiative allows investors to digitally store and access details of their demat and mutual fund holdings through DigiLocker, a secure cloud-based platform, thus benefiting both investors and their families.

The Growing Concern of Unclaimed Financial Assets

Over the years, the Indian financial system has faced a rising issue of unclaimed assets, including shares, mutual fund units, bank deposits, and insurance policies. Many investors fail to claim their assets due to reasons such as lack of awareness, death of the account holder without proper nominee information, or inability to trace investments across different financial institutions. SEBI's latest initiative, in collaboration with DigiLocker, aims to tackle this issue head-on by providing a seamless, digital framework for managing investment records.

Key Features of the SEBI-DigiLocker Initiative

1. Access to Securities Holdings in DigiLocker

With this new integration, DigiLocker users can now retrieve and store their statements of holdings for:

• Shares held in demat accounts
• Mutual fund units
• Consolidated Account Statement (CAS), which provides a complete financial overview of investments

This marks a significant expansion of DigiLocker’s services, which already include facilities for storing bank account statements, insurance policy certificates, and National Pension System (NPS) account details. By enabling centralized storage of investment-related documents, SEBI and DigiLocker are empowering investors to manage their portfolios more efficiently.

2. Nomination Facility for Secure Transmission of Assets

One of the most crucial aspects of this initiative is the introduction of a Data Access Nominee feature within DigiLocker. This function ensures that in the unfortunate event of an investor’s demise, their nominated legal heir or family member gains access to the investor’s financial records.

• Investors can designate nominees directly in their DigiLocker accounts.
• These nominees will be granted read-only access to relevant documents, preventing unauthorized modifications while ensuring visibility into the deceased’s financial holdings.
• This streamlined process simplifies asset transmission and reduces disputes over ownership.

3. Automated Notification to Nominees

To further enhance efficiency, SEBI has mandated an automated notification system for nominees. Here’s how it works:

• When an investor passes away, KYC Registration Agencies (KRAs)—which are registered and regulated by SEBI—will verify the event and trigger a notification to the investor’s Data Access Nominee.
• Upon receiving this notification, the nominee can access the deceased’s investment records in DigiLocker.
• This allows the nominee to initiate the process of claiming the assets with the relevant financial institutions without unnecessary delays.

4. Role of KYC Registration Agencies (KRAs)

KRAs play a critical role in ensuring the smooth operation of this initiative. They serve as the primary verification authorities that confirm an investor's demise and initiate the transmission of access rights to the designated nominee.

• This automated workflow reduces manual interventions, ensuring efficiency and preventing fraud.
• Investors can be assured that their financial records remain secure and accessible to the rightful beneficiaries.

Impact and Benefits of the Initiative

1. Significant Reduction in Unclaimed Assets

By allowing investors and their families to consolidate and track financial holdings in a structured manner, this initiative is expected to drastically reduce the volume of unclaimed investments. Legal heirs can now retrieve financial records effortlessly, eliminating bureaucratic hurdles.

2. Enhanced Financial Awareness and Control

Investors often struggle to keep track of their holdings across different demat accounts and mutual funds. The DigiLocker integration provides a single-window access to all securities holdings, enhancing financial awareness and control.

3. Secure and Transparent Digital Infrastructure

DigiLocker is a government-backed Digital Public Infrastructure with stringent security protocols. By leveraging this platform, SEBI ensures that investment records remain secure, tamper-proof, and accessible only to authorized users.

4. Faster and Seamless Transmission of Assets

Traditionally, claiming inherited assets has been a time-consuming and cumbersome process. This initiative minimizes paperwork, expedites asset transfers, and provides a structured approach to handling financial legacies.

Next Steps for Investors

To take full advantage of this initiative, investors should:

1. Sign Up on DigiLocker – If not already registered, investors should create a DigiLocker account at https://digilocker.gov.in.
2. Link Investment Accounts – Investors should fetch and store their demat and mutual fund statements in DigiLocker.
3. Appoint a Data Access Nominee – This is a crucial step to ensure seamless transmission of assets.
4. Inform Family Members – Investors should educate their legal heirs or nominees about DigiLocker and its role in accessing investment records.
5. Keep Information Updated – Regularly updating KYC details and nominee designations ensures a hassle-free experience.

Conclusion

SEBI’s collaboration with DigiLocker represents a major leap forward in financial governance and investor protection. By providing a secure, digital, and centralized mechanism for managing investment records, this initiative tackles the long-standing issue of unclaimed assets. It ensures that investors and their families can easily access and claim financial assets, making wealth transmission more transparent and efficient.

With increasing digitization in India’s financial landscape, this move not only strengthens financial security but also enhances the ease of doing business in the capital markets. Investors are encouraged to take proactive steps in leveraging this facility, ensuring a well-organized financial legacy for their families.

For further details, the complete circular can be accessed on the SEBI website at www.sebi.gov.in.