Finance reforms: From inclusion to continuity

India has transformed the way its citizens access and use the banking system — from Jan Dhan accounts and UPI to the RBI’s UDGAM platform for tracing unclaimed deposits. But the next banking reform must address a quieter problem: ensuring that savings remain connected to their rightful owners and reach their nominees or legal heirs

India’s banking story over the past decade has been one of remarkable transformation. The Pradhan Mantri Jan Dhan Yojana has helped millions enter the formal financial system. Payments through the Unified Payments Interface (UPI) were a game-changer in the digital payment landscape. The Reserve Bank of India’s UDGAM (Unclaimed Deposits-Gateway to Access Information) has also been a recent addition that allows customers and legal heirs to track down the deposits that they have forgotten in various banks.

The reforms have enhanced financial inclusion. But they also reveal a more muted problem that must not be overlooked when it comes to policy decisions - and it is one that needs to be addressed on a par: the lack of disconnect between savings and their proper owners.

The banks in the public sector transferred Rs 60,518 crore in unclaimed deposits to the RBI’s Depositor Education and Awareness (DEA) Fund as of January 2026. The regulators have made the recovery procedure possible during the ‘Your Money Your Right’ campaign, with Rs 5,777 crore recovered through 22.95 lakh claims across the country, showing that it can work if institutions coordinate well. This is a great achievement and deserves credit. They also pose a more basic question, however. So many deposits are going unclaimed; why is that? The solution goes beyond banking.

An unclaimed deposit isn’t a deposit that’s simply put into the memory hole. It can usually be traced back to the interplay of demographic, family fragmentation, migration, lack of nominee information, financial illiteracy, and sluggish succession processes. Typically, senior customers outlive their financial plan and legal beneficiaries do not know of their accounts or may have trouble accessing paperwork after the customer’s death. India’s financial reforms have been mainly directed towards facilitating access for people to the banking system. The next step will be to make sure that financial assets are not separated from their owners throughout their lives and that they pass on to their nominees or legal heirs.

This is the shift from financial inclusion to financial continuity.

Financial inclusion is asking the question, “Can everyone have a bank account?” Financial continuity asks: “Is there a continuity of financial assets, and do they continue as identifiable, accessible and transferable assets?”

From this perspective, UDGAM is not the end goal, but rather an important step. It aids citizens in reclaiming their lost savings. The next step along the line should be to cut down on the amount of deposits which are forgotten in the first place. Hence, India requires a Financial Continuity Framework comprising four complementary pillars.

The first pillar is Continuous Ownership. Nominations should not be a one-off and should be done once an account is opened. Know Your Customer (KYC) verification is already being done at regular intervals by banks. A similar ‘Know Your Nominee’ review every five years or after significant life changes (marriage, divorce, moving, death of a nominee) would keep the ownership information up to date. This is an important basis to approach with the Banking Laws (Amendment) Act 2025, which introduced the idea of ‘multiple nominees’.

Predictive Outreach is the second pillar. Advanced analytics have become a common practice for banks when it comes to fraud detection, tracking cyber risks and evaluating credit quality. The same capabilities can be used to recognise unclaimed accounts. Customers who have not received a nomination for their particular needs, repetitive communication failures, many years of no contact or inaction, or no changes to the nomination of old customers or on ageing fixed deposits can result in proactive reminder messages being sent via SMS, email, telephone or face-to-face at a branch before the deposits go into dormancy.

Integrated Succession Support is the third. One of the main reasons that unclaimed deposits come about is because the legal heirs go through a great deal of hassle. In this regard, the Indian Banks’ Association (IBA) has already adopted a common application form and standard operating procedure for the settlement of claims. This should develop into a safe and technically advanced system, which makes claims easy to process, whilst maintaining privacy and legal checks. The goal isn’t to undermine protections, but to eliminate needless procedural bumps.

The fourth pillar is called Financial Legacy Awareness. Generally, financial literacy campaigns emphasise saving and investing among citizens. They don’t often stress the need to keep nominees up to date, tell family about financial possessions or succession planning. They should be part and parcel of financial education in an ageing society. It’s important that each depositor understands that saving their money isn’t the only thing they’re protecting - they’re also protecting access to the money by the proper beneficiaries.

There are valuable lessons to be learned from international experience. There are a number of jurisdictions that have enhanced proactive tracing, made claims procedures easier and made greater investments in public awareness prior to assets becoming dormant. The challenge faced by India is unique due to its size, diversity, and rate of demographic change, but the rule remains the same: Prevention is better than recovery.

The RBI has already repeatedly stressed the rise in unclaimed deposits, and has recommended banks to conduct ‘periodic drives’ to find out who the depositors, their nominees and legal heirs are. The updated operational guidelines for the DEA Fund Scheme and directions on responsible business conduct have also enhanced the regulatory framework. Such efforts are a sign that policymakers are coming to understand the importance of proactive rather than passive engagement.

This is one more reason for this issue to be more talked about. Unclaimed deposits are starting to be seen as a measure of social change. A changing way of life with longer life expectancy, greater migration, scattered families and a growing reliance on technology are transforming wealth management and wealth transfer. Even with the advances in technology, the number of unclaimed assets will continue to grow if financial systems do not change.

India’s banking reforms have evolved through distinct stages. The first expanded access. The second transformed transactions. The third is improving recovery through platforms such as UDGAM. The fourth should be related to continuity - the continuity of financial assets to the owners throughout the life cycle. How quickly a well-developed financial system restores lost savings is not a good indicator of its maturity. Failure to forget can be considered to be the extent to which it prevents the forgetfulness of savings. UDGAM has revealed to India how to locate lost deposits. Banking reform should be done so that deposits will not be lost in the first place.

Typically, senior customers outlive their financial plan and legal beneficiaries do not know of their accounts or may have trouble accessing paperwork after the customer’s death

The writer is Professor, Department of Commerce, CHRIST University; Views presented are personal.