SEBI Issues Circular on Harnessing DigiLocker as a Digital Public Infrastructure for Reducing Unclaimed Assets in the Indian Securities Market

The Securities and Exchange Board of India (“SEBI”) has issued a circular bearing no. SEBI/HO/OIAE/OIAE_IAD-3/P/CIR/2025/32, dated March 19, 2025 (“Circular”), addressing the issue of unclaimed assets in the securities market. This Circular aims to reduce unidentified unclaimed assets by utilizing DigiLocker, a digital public infrastructure provided by the Government of India.

Key Highlights of the Circular:

Objective:

·       The circular aims to minimize the creation of unclaimed assets (UA) by harnessing DigiLocker and KYC Registration Agencies (KRAs).

·       DigiLocker will enable the storage of financial documents, such as mutual fund (MF) and demat holding statements, providing individuals with a consolidated view of their financial holdings.

DigiLocker Integration:

·       AMCs, RTAs, and recognized depositories are directed to register with DigiLocker as issuers.

·       Investors can fetch their holding and transaction statements of mutual funds and demat accounts directly into their DigiLocker accounts.

Nomination and Transmission:

·       DigiLocker provides a nomination facility, allowing the nominee to access the deceased user’s digital information.

·       Upon demise, the nominee is notified via SMS and email and can access the financial information for transmission purposes.

Reporting Demise:

·       DigiLocker will update the status of deceased users based on verified information from the Registrar General and Census Commissioner or KRA systems.

·       KRAs are mandated to electronically share all instances of investor demise with DigiLocker, ensuring up-to-date information.

Advisory to Investors:

·       SEBI encourages investors to adopt DigiLocker and specify nominee details to facilitate seamless transmission and prevent unclaimed assets.

·       Investors holding securities in physical form are advised to dematerialize their holdings to benefit from the DigiLocker mechanism.

Effective Date:

·       The circular will come into effect from April 01, 2025.

Compliance Requirements:

·       AMCs, RTAs, Depositories, and KRAs must report the status of implementation to SEBI.

·       Recognized depositories are required to amend relevant bye-laws, rules, and regulations accordingly.

The integration of DigiLocker into the Indian securities market represents a significant step towards reducing unclaimed assets. By enabling seamless access to financial documents, notifying nominees, and streamlining the transmission process, this initiative aims to protect investor interests and enhance transparency. The collaboration between SEBI, AMCs, RTAs, Depositories, and KRAs will ensure effective implementation and improved efficiency in managing unclaimed assets.