The Securities and Exchange Board of India (Sebi) has allowed investors to use DigiLocker, the digital public infrastructure initiative of the Indian government, to store digital documents. It is a significant development that could unlock wealth stuck because the nomination formalities are not done correctly or legal heirs are unaware of their nomination.
According to media reports, unclaimed assets are estimated to be over Rs 2,00,000 crore in India. These include equity shares, fixed deposits, bonds and other instruments. In most situations, the money flows into an investor protection fund
DigiLocker will store your demat account statements for shares and mutual funds. It will also store the consolidated account statement. Insurance companies and banks have already done it for policy and bank statements. Similarly, you can also store your National Pension Scheme statements.
Your nominee will have access to your DigiLocker after you. If they are not your assets' nominees, they can inform them and speed up claiming assets after you. You can also appoint data access nominees on DigiLocker. After you, such nominees will be granted 'read-only' access.
What could be the impact
Digital storage of personal data is a significant challenge. India has successfully built a public digital infrastructure system based on Aadhaar. It is globally called the 'India Stack' and is now used in many countries. Every other country wants to replicate the success. At the same time, there is barely any research on digital public infrastructure that does not mention the India Stack.
Such a system can reduce paperwork and unlock efficiency at an unprecedented level. The time you spend getting the paperwork done for claiming assets can be saved if you do your estate planning right. Having easy access to documents can cut disputes and save time. Successors for spending or investing can deploy the money unlocked. Either way, it would boost the economy.
You must sign up for the DigiLocker if you have not done so yet. As an investor, you can organize essential documents related to your investments in one place. You can share copies or download them for use later. There is a facility to create a verifiable QR code for your essential documents. That allows you to use it for bank verification for loans, investments, or other transactions. With Sebi's move to sign up with DigiLocker, many more documents can be stored under one umbrella application.
What can happen next
An essential thing in estate planning is the writing of a will. A will supersedes all nominations in case of a dispute. Although most legal experts say that 'will' registration is not mandatory, it is helpful for wealthy families. Some companies facilitate online registration of your will. That ensures a government record of the will. However, DigiLocker should be explored as a possible solution. It ensures the digital storage of an important document. At the same time, the government can get a copy of the will. That will encourage people to use the digital public infrastructure efficiently. It may be easier said than done, though, as it could require amendments to succession laws.
The government may also want to consider using the investor protection fund managed by the Ministry of Corporate Affairs to incentivize demat account holders to store financial documents through the DigiLocker application.
Building a legacy is everyone's dream. You want to leave behind enough for your future generations. At the same time, you don't want your children to live with disputes after you. Your money and your emotions are deeply connected. You need to organize your finances better, as any inefficiency could stall wealth creation and estate planning.