SEBI Collaborates with DigiLocker to Minimize Unclaimed Assets and Strengthen Investor Protection

The Securities and Exchange Board of India (SEBI) has partnered with DigiLocker, a government-backed digital document storage platform, to address the issue of unclaimed assets in the Indian securities market and enhance investor protection. This collaboration is expected to significantly improve the accessibility and management of financial assets, making it easier for investors and their families to handle investments, especially in cases of unforeseen events.

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Key Features of the Initiative

With this initiative, investors can now store and retrieve their demat and mutual fund holding details via DigiLocker. The integration will allow users to fetch their shareholding statements, mutual fund unit details, and Consolidated Account Statements (CAS) directly from their demat accounts. This marks a crucial step toward digitizing financial documentation and streamlining investor access to crucial financial information.

Currently, DigiLocker already provides services that include the storage of bank account statements, insurance policy certificates, and National Pension System (NPS) account details. By incorporating demat and mutual fund holdings into the platform, SEBI aims to provide a unified and secure digital repository for investors.

Simplifying Asset Management for Investors and Families

One of the significant benefits of this initiative is its provision for nominating individuals in DigiLocker accounts. Investors can designate nominees who will gain access to important financial documents in the event of the investor’s demise. This ensures that legal heirs or family members can efficiently manage and claim the deceased’s financial assets without unnecessary delays.

Moreover, DigiLocker will update the status of a user’s account after their passing using information from death certificates or KYC Registration Agencies (KRAs). Once a user’s death is confirmed, the system will automatically send notifications via SMS and email to the nominated individuals. This proactive approach will simplify the asset transmission process, reducing the likelihood of financial holdings remaining unclaimed.

Addressing the Issue of Unclaimed Assets

Unclaimed assets in the securities market have been a growing concern, often resulting from dormant accounts, outdated contact details, and complex legal processes for asset transmission. SEBI’s integration with DigiLocker seeks to resolve these challenges by making financial records easily accessible, ensuring investors and their families can retrieve necessary documents without bureaucratic hurdles.

SEBI has directed depositories, asset management companies (AMCs), and Registrar and Transfer Agents (RTAs) to register with DigiLocker so investors can fetch their mutual fund and demat account details effortlessly. KRAs will also play a critical role in sharing investor death-related information with DigiLocker, further facilitating seamless transmission of assets to the rightful heirs.

By leveraging DigiLocker’s capabilities, SEBI aims to prevent financial assets from becoming unclaimed, addressing common issues such as missing nominee details and non-updated KYC information. Investors are encouraged to update their DigiLocker accounts and specify nominees to ensure their financial holdings are easily transferred to their beneficiaries.

Implementation Timeline and Future Impact

The initiative is set to take effect from April 1, 2025. This move follows SEBI’s consultation paper released in December, which proposed utilizing the DigiLocker system to tackle the problem of unclaimed assets in the securities market.

Experts believe that this initiative will bring about greater transparency and efficiency in financial asset management. By automating key processes such as account status updates and nominee notifications, SEBI and DigiLocker aim to eliminate administrative delays and reduce the volume of unclaimed assets in India’s securities market.

Additionally, the move aligns with the Indian government’s broader digital transformation agenda, which seeks to leverage technology to enhance financial inclusion and ensure better governance in the financial sector.

As more investors embrace digital solutions for financial document management, initiatives like this could pave the way for further innovations in asset security and transmission processes.

SEBI has urged all investors to make use of DigiLocker’s features and appoint nominees to prevent complications in asset inheritance, ensuring their financial legacy is smoothly passed on to their rightful heirs.