FM Nirmala Sitharaman urges RBI & SEBI to standardise KYC

Finance Minister Nirmala Sitharaman has made a strong appeal to India's top financial regulators, including the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), among others. Her message? Accelerate the return of unclaimed deposits and establish a unified Know Your Customer (KYC) process that applies across banks, insurance, pensions, and securities. She emphasised the need for a more coordinated approach to get dormant funds back into the hands of their rightful owners.

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Unclaimed Deposits Are Becoming a Big Problem

Here's the scale we're talking about: As of early 2023, public sector banks had sent about ₹35,000 crore to the RBI's Depositor Education and Awareness Fund. This money came from over 10 crore inactive accounts. And that's just the beginning; the total unclaimed deposits in Indian banks now top ₹78,000 crore. That's a massive chunk of money sitting unused.

To address this, the RBI has been testing solutions like Video-KYC and working with local business correspondents to help people, especially those in remote areas, reclaim their money more easily.

A Push From the Top

Speaking in Mumbai on June 11, 2025, the finance minister said, "We need to speed up unclaimed deposit refunds." She called for RBI and SEBI to join forces and roll out a seamless KYC framework that works across all types of financial accounts.

This isn't her first push. In May, she led a Financial Stability and Development Council (FSDC) meeting where she pressed for a "special drive" to return unclaimed deposits quickly, especially when nominee details are available.

RBI's Plans Are Already in Motion

The RBI has been making moves, too. In late May, it shared draft guidelines to simplify account reactivation and claim processes. These include easier ways to update Know Your Customer (KYC) information, opening accounts over video calls, and allowing business correspondents to assist with the process.

A major initiative, the "100 Days–100 Pays" campaign, was launched on June 1. Banks have been instructed to locate and resolve the top 100 unclaimed deposits in each district within 100 days.

RBI is also building a tool called UDGAM (Unclaimed Deposits Gateway to Access Information). This portal will enable people to search for unclaimed deposits across banks using just a few basic details, such as name and address. It's expected to launch soon.

Why a Centralised KYC Makes Sense

Minister Sitharaman's push for a standard Know Your Customer (KYC) system isn't a new idea. Earlier in the year, SEBI Chairman Tuhin Kanta Pandey announced plans for a central Know Your Customer (KYC) database. This would allow you to complete KYC once and use it across all financial services, eliminating the need to repeat the same steps for each bank or account type.

Going Digital to Solve an Offline Problem

The central KYC system is just one part of a bigger digital push. The RBI now requires banks to post updated unclaimed deposit lists online, with monthly updates and search tools. SEBI is also leveraging technology, utilising AI for fraud detection, market surveillance, and expedited IPO processing. So far, it's already helped remove over 70,000 fake investment accounts.

It's Not Just Tech, It's Also About the Law

Even with more intelligent systems, some delays are hard to avoid. In cases where accounts don't have nominees, banks still require proper legal proof, such as death certificates and heir verification. The finance minister acknowledged this in May, noting that not even the best tech can skip necessary legal steps.

RBI's tightened rules now require banks to reach out to account holders or their nominees every quarter via SMS, email, or even letters. Additionally, they must display unclaimed deposit details both online and at the branch level.

What's Next?

• Finalising RBI's new rules: The public comment period ended on June 6, 2025. Final regulations are expected soon.
• Launch of UDGAM and the KYC Registry: Both are set to go live shortly, making it easier to find and reclaim funds.
• All hands on deck: Regulators, banks, and tech partners will need to work closely to get things moving.
• Security and compliance: As more systems transition to digital, protecting consumer data and adhering to legal regulations will be essential.

Wrapping Up

Finance Minister Sitharaman's call to "speed up unclaimed deposit refunds" could be a turning point in India's financial landscape. The focus is on removing roadblocks, whether they're digital, legal, or bureaucratic.

With a unified KYC system, improved digital tools like UDGAM, and tighter coordination among financial players, there is real potential to return billions of rupees to people, especially those in rural or underserved communities. It's about more than just money; it's about restoring trust and promoting financial inclusion nationwide.