Unclaimed Assets Mount Despite Regulator Push

India's financial system is holding onto billions in unclaimed deposits, with Rs 60,518 crore sitting in public sector banks alone by January 2026, destined for the Reserve Bank of India's Depositor Education and Awareness (DEA) Fund. Across all banks, this total reached Rs 72,454 crore by the same month. Beyond banking, unclaimed insurance payouts amounted to Rs 8,973.89 crore by February-end, and mutual fund investors left Rs 3,749.34 crore unclaimed. These sums, accumulated over years, represent forgotten savings and highlight ongoing gaps in financial engagement. Life insurers held Rs 20,062 crore in unclaimed amounts by March 2024, and mutual funds saw unclaimed dividends and redemptions climb to Rs 3,452 crore in FY24-25.

Regulators are actively trying to return these assets. The "Your Money, Your Right" campaign between October and December 2025 helped return Rs 5,777 crore to nearly 23 lakh claimants by February 28, 2026. Digital platforms such as the RBI's UDGAM portal, IRDAI's Bima Bharosa, and SEBI's MITRA aim to make asset tracing easier. The Banking Laws (Amendment) Act, 2025, has also introduced more nomination options to help settle claims. Despite these measures, unclaimed funds continue to grow, primarily due to outdated contact information, a lack of nominations on accounts, and general investor inertia.

Green Bonds Show Investor Appeal, But Face Pricing Challenges

In contrast to dormant assets, India's Sovereign Green Bond (SGrB) program has seen consistent market engagement. Since its inception in FY 2022-23, the average bid-cover ratio has remained above 2, reaching 2.32 in FY 2025-26, indicating sustained demand. A notable feature is the 'greenium', a premium paid by investors for the environmental credentials of a bond. In a November 2025 auction, SGrBs achieved a 7 basis point greenium.

However, this positive interest is tempered by difficulties in pricing. Recent SGrB auctions have been canceled because investors demanded higher yields than the RBI found acceptable. This shows that while a greenium exists, it is fragile and inconsistent, especially during uncertain economic times. Investors are increasingly unwilling to accept lower yields solely for the 'green' label. For example, a 30-year SGrB auction in June 2025 was canceled by the RBI, despite the offer size being oversubscribed, highlighting the sensitivity to yield demands.

The government, through Minister of State for Finance Pankaj Chaudhary, has stated that no tax incentives are planned for SGrB investors. This approach emphasizes fiscal discipline and relies on the inherent appeal of SGrBs to finance climate-friendly projects, rather than using incentives to artificially boost demand. This strategy aligns with a global trend where the greenium has been declining, suggesting a maturing market that requires careful calibration. The SGrB market remains dominated by sovereign issuances, underscoring the government's central role.

Outlook for Unclaimed Funds and Green Bonds

The government is committed to reducing unclaimed financial assets through ongoing regulatory actions and digital initiatives. These efforts are expected to improve recovery rates for claimants. For Sovereign Green Bonds, the path forward involves continuing to navigate market pricing. While the current strategy favors borrowing efficiency over tax incentives, sustained investor participation will depend on the RBI's ability to balance yield expectations with the goal of building a solid domestic green bond market. Some analysts suggest that scaling up green finance may eventually require clearer policy support or more substantial demand-side incentives to bridge the gap between climate goals and market realities.