SEBI Proposes Harnessing DigiLocker to Reduce Unclaimed Assets in the Securities Market

The Securities and Exchange Board of India (SEBI) is taking steps to modernize India’s financial system by tackling an important issue of unclaimed assets. These are funds or investments that have been left untouched by their owners or new heirs for a long time. SEBI proposed digilocker integration to reduce unclaimed assets. 

In this blog, you will get all the information on why SEBI Proposes Harnessing DigiLocker to Reduce Unclaimed Assets in the Securities Market.

What Are Unclaimed Assets?

Unclaimed assets are investments or funds not used by their rightful owners. These assets are usually left when the investors fail to update contact information, unaware of belongings, and unable to claim their assets due to death. Some of the common examples of unclaimed assets are unclaimed shares, mutual funds, dividends, and insurance payouts.

DigiLocker Integration in the Financial Sector

DigiLocker is a digital storage platform provided by the government of India, where Indian citizens can store and share documents safely. SEBI wants to integrate DigiLocker to centralise the financial records and make them easier to manage. Investors can access important documents and nominees can use them to claim assets after the investor passes away.
This new move aims to expand the digital India mission by using DigiLocker. SEBI will help investors and nominees to access financial information and claim unclaimed assets easily.

Impact of SEBI’s Proposal 

Here’s how it works:

1. Storing Demat Account and Mutual Fund Statements

Now investors can securely store demat account details and mutual fund statements in DigiLocker. Investors can access their documents anytime from the app whenever it is required.

2. Nominee Notifications

One of the biggest aspects of this integration is notifying nominees about the estates of deceased investors. If an investor dies, the KYC Registration Agencies (KRAs) will send vital information to DigiLocker. It will send an automated notification to the named nominee by SMS and emails, removing the requirement for long forms and a manual exchange with asset management firms (AMCs). It also ensures that heirs are able to get the asset.

3. Simplified Asset Transmission

After the nominee has been notified, they are able to access the electronic records stored in DigiLocker. Once they have access, they can directly contact the Asset Management Companies (AMCs) or Depository Participants (DPs) to begin the transfer of assets. The simplified process helps reduce delays and prevents the loss of assets because of complicated procedures.

4. Enhanced Security

DigiLocker guarantees that all files are protected and accessible to users who have been granted access which makes it a safe and secure system to manage financial data. 

By digitizing financial records and integrating them with DigiLocker, SEBI is making it easier for investors and their heirs to manage and claim unclaimed assets. This approach provides greater security, efficiency, and transparency, aligning with India’s goal of becoming a digitally advanced nation.

The Registrar General of India plays a critical role by providing access to vital records, such as death certificates. This integration ensures that claims are verified swiftly, reducing delays caused by manual document checks.

 Benefits of the DigiLocker Integration

• Reduced paperwork
• Enhanced security 
• Greater awareness

SEBI’s Focus on Investor Protection

SEBI always works to protect investors and improve the efficiency of the market. One of the most important initiatives is the Investor Protection and Education Fund (IPEF), which educates investors and solves their issues. With the integration of DigiLocker, SEBI wants to make unclaimed asset management easy for investors. By digitalizing the investor’s records, investors and nominees can claim the assets without delays. This integration will support SEBI efforts along with the Registrar General of India to improve the asses transmission and make the system secure.

Public Feedback and Next Steps

SEBI is open for public comment till 31st of December 2024. The time frame allows all stakeholders including financiers, investors, and industry experts, to offer their opinions about the proposed integration. When the feedback is analyzed, SEBI plans to implement the project in early 2025. SEBI will make sure that the integration runs smoothly and is advantageous for everyone who is involved.

Conclusion

SEBI’s plan to incorporate DigiLocker in the market for securities is a major step towards the reduction of unclaimed assets, and the improvement in the management of assets in India. Through the use of digital technology, SEBI is making the claim and transfer of assets faster, more secure, and transparent. As India is on its way to becoming a technologically advanced country such initiatives will provide advantages to investors of all kinds, and ensure they are adequately protected and effectively handled.