India has a financial system that is extraordinarily good at knowing who you are when you walk in and completely turning blind to the “zombie money” you leave behind.
The RBI’s DEAF - Depositor Education Awareness Fund - held Rs 60,518 crore claimed bank deposits despite years of regulatory pushback. The IEPF holds another Rs lakh crore in forgotten dividends and shares. Unclaimed insurance proceeds run into tens of thousands of crores more. Add pension accounts, provident funds, and inoperative savings accounts, and the Supreme Court of India is now dealing with a public interest litigation that pegs total unclaimed financial assets across the country at over Rs 3.5 lakh crore.
To put that in perspective, India has left more wealth sitting idle than the entire GDP of some mid-sized countries and that pile grows every year.
The KYC Mess: When the problem Identified is Wrong, the Solution is Wrong Too
The instinct of regulators and financial institutions is to prescribe more KYC, faster KYC, digital KYC, video KYC, etc. It’s the wrong prescription for the actual ailment. KYC is a handshake, not a relationship. When a bank onboards a customer, it captures a moment. A name, an address, a phone number, a face and that data represent who the customer was on that specific day.
Human lives, however, do not stay still. The RBI’s own data shows that roughly 29.8 crore bank accounts have no nominee registered at all, and huge amounts of money sit in those accounts at the risk of eventual dormancy. People who opened those accounts did not forget to add nominees because they are careless. They changed jobs, changed cities, got married, lost family members, and fell through the cracks of the system that never tried to keep up with them.
The financial system calls it an unclaimed bank deposits problem. It is actually an identity continuity problem and those are two very different things. The industry misdiagnosed the patient and prescribed KYC as the cure. The result? India’s KYC has never been better. Aadhaar-based eKYC processes over 50 lakh verifications a month. Video KYC now allows onboarding from a person’s living room and a person is verified in less than 60 seconds. But none of that capacity helps when a 67-year old woman in Coimbatore moves to her daughter’s home in Pune, changes her phone number and loses her old passbook. The bank has a perfect KYC record of who she was in 2011 but no mechanism to know who she is in 2026, where she lives or how to reach her.
The DEAF stood at Rs 2,795 crore in 2015. It’s Rs 60,518 crore in 2026, and those ten years include PMJDY, digital banking expansion, and a complete overhaul of KYC norms. Better KYC didn’t slow the growth of unclaimed funds by a single rupee. The government’s nationwide campaign, “Your money, Your Right” ran across 748 districts in 2025 and returned Rs 5,777 crore. That was a heartening moment, but it still represents less than 10% of the total pool. Even that, only after regulators had to incentivise banks with a 5-7.5% fee for successful recoveries.
What the System Badly Needs is a Persistent Identity Cure
The financial industry must stop treating identity as a static document and start treating it as a living data layer. The question isn’t, “Who was the customer at onboarding?”. The real question must become, “Who is the customer now and can we still reach them?” It calls for a fundamentally different infrastructure. It requires the ability to track identity signals over time, including updated phone numbers, address changes, employment transitions, and family relationship data. It requires the kind of mobile number intelligence that correlates a SIM’s history, device changes, and geographic footprint to establish whether an account holder is still alive and reachable. Critically, it needs nominee data that financial institutions can actually use when the original account holder is no longer contactable, not just nominee names typed into a form at onboarding and then forgotten.
The PFRDA reports that over two lakh pension accounts worth Rs 30,610 crore sit without valid nominations. The insurer who sold a policy in 2005 did their KYC correctly. The policy holder’s nominee, now an adult living in a different city, simply has no idea the policy exists. No amount of biometric verification would have changed that outcome 20 years later. The fix is better infrastructure, not compliance theater.
Also Read: India Has Solved Small Credit. Why Hasn't It Solved Housing Finance?
India’s regulators deserve credit for acknowledging the problem. The UDGAM portal, IRDAI’s Bima Bharosa platform, and SEBI’s MITRA tool all move in the right direction. However, these are discovery tools, not preventive ones. They help people find money that has already gone missing. Prevention requires financial institutions to maintain an active, living connection to their customers and their nominees across the full duration of the financial relationship.
India built the world’s most powerful payment infrastructure. Now it needs to build equally powerful identity continuity infrastructure. Otherwise, the DEAF can hit £1.5 lakh crore before we notice and another generation of families will lose access to money that’s rightfully theirs. Better KYC will help new customers onboard faster, Identity continuity will ensure those customers and their families can find their money decades from now. Those are completely different problems and right now only one is being solved.
