Unclaimed investments refer to financial assets that remain unclaimed by the rightful owner or beneficiary for an extended period. These situations often arise when investors forget about their holdings, change their residence without updating contact details, or pass away without informing their legal heirs. The method for checking unclaimed deposits and investments varies based on the type of investment. Unclaimed bank deposits can be located through the UDGAM portal launched by the Reserve Bank of India by entering the required details of the account holder. Similarly, unclaimed shares and dividends can be traced via the Investor Education and Protection Fund Authority (IEPF) website by providing the relevant information of the shareholder. However, there is currently no centralized platform or database to access information regarding unclaimed insurance policy proceeds.

Types of Unclaimed Investments

1. Bank deposits (Savings, Fixed, Recurring)

2. Shares and dividends

3. Mutual funds

4. Insurance proceeds

5. Provident Fund / Pension

6. Post Office savings or NSCs

7. Bonds and debentures

In this opinion, we are going to focus only upon claiming bank deposits in one’s bank account by their legal heirs.

Who Can Claim Unclaimed Investments in a Bank Account?

1. The Account Holder: If the account holder is alive, they can directly reclaim the unclaimed amount by furnishing valid identification and proof of ownership to the respective bank.

2. Legal Heirs or Nominees: In the event of the account holder’s death, the claim can be made either by the registered nominee or, in the absence of one, by the legal heirs.

   • Nominee: A registered nominee can claim the unclaimed deposits by submitting essential documents, including a valid ID proof, the account holder’s death certificate, and a duly filled claim form.

   • Legal Heirs: If no nominee is registered, legal heirs such as the spouse, children, or other close relatives may initiate the claim process. They are generally required to provide the death certificate of the account holder, a legal heir or succession certificate, proof of identity and relationship, along with any additional documents requested by the bank.

3. Authorized Representatives: In some cases, a person holding a valid Power of Attorney or other legal authorization may claim the unclaimed funds on behalf of the account holder or the legal heir(s), subject to the bank’s verification and approval process.

Understanding The Procedure To Claim Unclaimed Investment By The Legal Heir

When a bank deposit remains unclaimed due to the account holder’s death and no nominee is registered, the legal heir can follow these steps to claim the funds:

1. Approach the Concerned Bank: The legal heir should visit the branch where the account was held and inform the bank about the account holder’s death and their intent to claim the unclaimed deposit.

2. Submit a Claim Application:A written application must be submitted to the bank requesting the release of the unclaimed deposit. The application should include:

1. Details of the deceased (name, account number, branch, etc.)

2. The claimant’s relationship with the deceased

3. Purpose of the claim

3. Provide Required Documents: The legal heir is required to submit the following documents (bank-specific requirements may vary):

• Death Certificate of the account holder

• Legal Heir Certificate or Succession Certificate

• Proof of Identity and Address of the legal heir

• Proof of Relationship with the deceased (like a birth certificate, ration card, etc.)

• Bank account details of the claimant (for credit of funds)

• Indemnity Bond and/or No Objection Certificate (NOC) from other legal heirs (if applicable)

In the case of Ram Chandra Arya v. Man Singh [1967 INSC 293], the Supreme Court dealt with a dispute over the right to claim financial benefits after the death of a government servant. While one party asserted their claim as a natural heir, the other held a succession certificate. The key legal issue before the Court was whether movable assets such as bank deposits could be claimed without a succession certificate. The judgment underscored that legal rights must be proven and not merely assumed based on relationship, and that banks are justified in releasing funds only to those who possess valid succession documents. It also clarified that nomination does not override the rights of legal heirs under succession law. This decision remains highly relevant today in resolving disputes over unclaimed bank deposits, especially in the absence of a nominee or in cases involving multiple heirs.

4. Bank’s Due Diligence and Verification:The bank will verify the documents and may request additional information. If there are multiple claimants, banks often ask for NOCs or mutual agreement on distribution.

5. Approval and Disbursement: Once the bank completes its verification and is satisfied with the claim, the unclaimed amount will be released to the legal heir’s bank account.

When a legal heir seeks to claim unclaimed bank deposits, several challenges may arise due to legal, procedural, and documentation-related issues. Here are some common challenges faced during this process:

1. Lack of Proper Documentation

   • Death Certificate: If the death certificate of the deceased account holder is not available or is delayed, the claim process can be delayed.

   • Succession or Legal Heir Certificate: Obtaining a succession certificate or legal heir certificate can be a lengthy process, especially in the absence of a will. Legal heirs may face challenges in acquiring these documents, particularly when the deceased's family is divided or disputes arise over who the rightful heirs are.

   • Identity and Relationship Proof: Banks require legal heirs to submit documents proving their identity and relationship to the deceased. In some cases, providing acceptable proof may be difficult.

2. Disputes Among Legal Heirs

   • Multiple Claimants: If there are multiple legal heirs, conflicts over the division of the unclaimed deposit may arise. Disagreements among heirs can result in delays and additional legal proceedings, such as obtaining a NOC or resolving a dispute in court.

   • Competing Claims: In cases where the deceased did not leave a will, multiple family members or relatives may stake a claim, resulting in disputes over who is the rightful heir.

3. Nominee vs. Legal Heir

   • Nominee Disputes: If a nominee was registered for the account, banks are required to release the deposit to the nominee. However, the nominee may only hold the funds in trust for the legal heirs. If the nominee is not a legal heir, disputes can arise, and the bank may delay the process until the matter is settled legally.

   • Misunderstanding of Nominee Role: Often, a nominee is mistakenly considered the sole beneficiary, leading to confusion and delays if the nominee is not a legal heir or if there are other claims from family members.

4. Bank Procedures and Delays

   • Complex Bank Procedures: Each bank may have its own set of requirements and documentation for processing claims, leading to inconsistencies and confusion among claimants. Some banks may request additional documents or impose strict conditions, slowing down the process.

   • Lengthy Processing Time: Verifying documents, especially in cases involving large sums, may take a long time. Banks may also require further verification from their legal or compliance departments, causing additional delays.

5. Legal and Court Intervention

   • Court Cases: In situations where the bank refuses to release the funds without a clear legal heir, the matter may need to be resolved in court. Legal heirs may need to file a petition for succession or go through legal procedures to obtain the rightful claim, adding legal costs and time.

   • Disputes Over the Succession Certificate: If there is a dispute over the rightful heirs, it may take time to obtain a succession certificate or resolve the issue through court proceedings, especially if the heirs cannot agree on the rightful division.

6. Inoperative or Dormant Accounts

   • Account Status: Some accounts may have been marked as inoperative or dormant due to inactivity for a prolonged period. If this occurs, the bank may transfer the funds to the Depositor Education and Awareness Fund (DEA Fund) or take other actions that complicate the process of claiming the funds.

   • Banks’ Reluctance to Process Claims: Banks may sometimes be reluctant to process claims on dormant accounts without thorough verification, particularly if the account has been inactive for many years.

7. Tax Liabilities and Outstanding Dues

   • Outstanding Debts: If the deceased account holder had any outstanding loans or debts with the bank, the bank may adjust the unclaimed deposit against the dues. This could reduce the amount available for claim.

   • Tax Implications: Legal heirs may also face complications with the tax authorities, especially if the deceased’s estate includes significant unclaimed assets. They may be required to pay inheritance taxes or other dues before claiming the funds.

Addressing These Challenges

Legal heirs can navigate these challenges by ensuring they have all necessary documents in order, communicating effectively with the bank, and seeking legal assistance where required. Legal professionals and financial advisors can help expedite the process, especially in complex cases involving multiple claimants or disputes.