Supreme Court Probes Constitutional Violations Over ₹3.5 Lakh Crore in Unclaimed Financial Assets

New Delhi – The Supreme Court of India has initiated a significant examination of a Public Interest Litigation (PIL) that brings to light the staggering sum of over ₹3.5 lakh crore in unclaimed financial assets scattered across India's financial ecosystem. A Bench led by Justice Vikram Nath and Justice Sandeep Mehta issued notices to the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority of India (IRDAI), and the Central Government, among other bodies, demanding a response to a plea that frames the issue not merely as a matter of financial oversight but as a profound violation of fundamental constitutional rights.

The PIL, filed by activist Aakash Goel, seeks the establishment of a comprehensive legal and institutional framework to identify, reconcile, and return these dormant funds to their rightful owners or legal heirs. The case, Aakash Goel vs. Reserve Bank of India , argues that the current fragmented and inadequate regulatory mechanisms have created a systemic failure, trapping the wealth of millions and infringing upon their constitutional guarantees.

The Core Legal Challenge: A Violation of Fundamental Rights

At the heart of the petition is the assertion that the inability of citizens to access their own or inherited financial assets constitutes a breach of several key constitutional provisions. Senior Counsel Mukta Gupta, appearing for the petitioner, articulated that this denial of access contravenes:

• Article 14 (Right to Equality): The lack of a unified system disproportionately affects vulnerable sections of society, such as senior citizens, the economically weaker, and those with limited digital literacy, creating an unequal playing field for asset recovery.
• Article 21 (Right to Life and Personal Liberty): The petition extends the interpretation of this article to include the right to live with dignity, arguing that access to one's financial resources is essential for a dignified existence.
• Article 300A (Right to Property): This article explicitly states that no person shall be deprived of their property save by authority of law. The petitioner contends that the current regulatory vacuum effectively deprives citizens of their property without a fair, just, or reasonable legal procedure.

"The petition contended that the denial of access to one’s own or inherited financial assets constitutes a violation of Articles 14 and 21 of the Constitution, which guarantee equality before law and the right to live with dignity, as well as Article 300A, which protects the right to property," the plea states, highlighting the constitutional gravity of the matter.

The argument posits that the state and its regulatory bodies have a positive obligation to facilitate the return of these assets, and their failure to do so is an abdication of their constitutional duty.

The Scale of the "Trapped Wealth" Problem

The petition, supported by extensive data from Right to Information (RTI) applications and official reports, paints a stark picture of the scale of unclaimed assets:

• Depositor Education and Awareness Fund (DEAF): Managed by the RBI, this fund has swelled from ₹2,795 crore in 2015 to a colossal ₹78,213 crore by March 2024.
• Investor Education and Protection Fund (IEPF): Administered under SEBI's purview, this fund holds over ₹18,000 crore in unclaimed dividends and shares.
• Senior Citizens’ Welfare Fund (SCWF): This fund has received more than ₹7,000 crore between 2016 and 2021 from unclaimed PPF accounts and other small savings schemes.
• Pension Funds: The Pension Fund Regulatory and Development Authority (PFRDA) has reported that over two lakh pension accounts, worth a combined ₹30,610 crore, lack any nomination.

The petitioner underscored that this is not an issue confined to large-scale investors. Data reveals that over 9.22 crore inoperative bank accounts hold an average balance of just ₹3,918, indicating that millions of small savers and low-income families are affected. The absence of mandatory nominee details, coupled with a lack of proactive communication from financial institutions, ensures these funds remain inaccessible to rightful heirs, particularly after the death of the primary account holder.

A Call for a Unified, Centralised Solution

The central prayer of the PIL is for a directive to create a "centralised portal" that would serve as a one-stop solution for citizens. Such a portal would allow individuals, after completing e-KYC verification, to view a consolidated list of all their financial assets—whether active, dormant, or unclaimed—across all entities regulated by the RBI, SEBI, IRDAI, and PFRDA.

The plea highlights the shortcomings of existing siloed efforts. While the RBI has launched the "UDGAM" portal for unclaimed bank deposits, it does not integrate with systems for unclaimed shares, insurance policies, or pension funds. This fragmentation places an unreasonable burden on individuals, especially legal heirs, who must navigate a labyrinth of different regulators and institutions with varying procedures.

"The petition has sought creation of a centralised portal that would allow citizens to access information about all their financial assets, whether operational, inactive, dormant or unclaimed, across entities regulated by RBI SEBI, and IRDAI," one source reported.

Furthermore, the PIL seeks directions for: 1. Mandatory Nominee Details: To issue guidelines making it compulsory for regulated entities to capture and verify nominee details for every financial asset. RTI replies revealed that nearly 29.8 crore public sector bank accounts, holding over ₹10 lakh crore, lack nominees. 2. Integration with Death Registry Data: To establish a seamless system, in coordination with the Ministry of Home Affairs, that enables financial institutions to be proactively notified of an asset holder's demise. This would trigger communication with identified family members or nominees, preventing assets from becoming dormant in the first place.

Legal and Systemic Implications for the Financial Sector

The Supreme Court's decision to entertain this PIL signals a potential paradigm shift in financial regulation and consumer rights. A directive in favor of the petitioner would have far-reaching consequences:

• Regulatory Overhaul: Financial regulators would be compelled to collaborate and create a unified technological and legal framework, a significant departure from their current siloed operations.
• Compliance Burden on Institutions: Banks, insurance companies, mutual funds, and other financial entities would face new, stringent compliance requirements regarding data management, nominee registration, and proactive communication with customers and their heirs.
• New Avenues for Legal Practice: The establishment of a new framework could create opportunities for legal professionals in areas of compliance advisory, asset recovery, and estate planning, particularly in navigating the new centralized system.
• Strengthening Consumer Rights: The case reinforces the judiciary's role in protecting the economic rights of citizens, potentially setting a precedent that the right to property under Article 300A includes the right to an effective and accessible mechanism for its recovery.

Senior Counsel Mukta Gupta pointed out the inertia of the authorities, noting that a similar issue was raised before the Delhi High Court. "The HC had acknowledged the gravity of the problem but left it to the authorities to consider a policy. However, nothing has moved since then," she argued before the Supreme Court. This highlights the petitioner's contention that judicial intervention is now necessary to break the administrative deadlock.

As the Supreme Court awaits responses from the regulators and the government, the legal and financial communities will be watching closely. The outcome of this case could not only unlock ₹3.5 lakh crore of "trapped wealth" for ordinary citizens but also redefine the responsibilities of financial institutions and the scope of constitutional property rights in the digital age. The matter is posted for hearing after four weeks.