Zerodha has added an online nomination and alert feature that will help in preventing the instances of unclaimed money in the financial system, said Nithin Kamath, the founder and CEO of the domestic brokerage major said Monday.

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"There's at least Rs 80,000 crores of unclaimed money across banks, mutual funds, Demats, and more. We are hoping this alert feature which notifies nominees when accounts become dormant and they don't reKYC, can help in solving this problem," Kamath said on Twitter.

There's at least Rs 80,000 crores of unclaimed money across Banks, Mutual funds, Demats, & more.

We are hoping this alert feature which notifies nominees when accounts become dormant & they don't reKYC, can help in solving this problem.Hopefully, the Banks & others follow. https://t.co/iYLHudbaLH— Nithin Kamath (@Nithin0dha) September 13, 2021

A study claims banks, mutual funds, Demat accounts, and more have at least Rs 80,000 crore of unclaimed money as most people don't add nominees to their accounts.

The major reason why there is unclaimed money, to begin with, is most people don't add nominees to their Demat and trading accounts. Adding nominees have always been an offline process despite Demat account opening becoming digital.

"This is because the process of nomination that the MCA defined mandated the collection of a physical form and multiple witness signatures. The regulation around this changed very recently, with SEBI allowing an option to add up to 3 nominees to your trading and Demat account completely online using eSign," Zerodha said in a blog post.

However, Zerodha has now made the nominee adding process online. On their Zerodha consoles, investors can add single or multiple nominees. If their Demat or trading account remains inactive for over a year, and they do not reactivate it, Zerodha will send a notification to their nominees.

"This is to inform your nominee(s) are informed of the existence of your trading and Demat account and the nomination in case of any unfortunate eventualities," it said.

Also Read | Cryptocurrency has potential to disrupt online brokers, exchanges: Zerodha co-founder Nithin Kamath

Adding nominees on Zerodha

Here's how investors can add nominees via their Zerodha consoles:

Visit the Zerodha console and from the top bar, click on 'Account'. Then move to the second option, 'Nominees'.

Click on 'Add Nominees' and enter details.

You need an Aadhaar to receive the OTP and eSign.

Upload proof of identity of the nominee in PDF format.

The addition of the nominee to your account can take up to 48 hours. However, you cannot modify nominees online. This nomination will also cover your mutual fund and other security holdings.

Also Read | Zerodha gets Sebi nod to launch mutual fund business

Why notify the nominees?

A survey conducted by ET Wealth found a corpus of over Rs 82,000 crore is lying unclaimed in India.

There are over Rs 26,000 crore unclaimed provident fund accounts and over Rs 18,000 crore bank accounts and inactive mutual fund accounts. LIC policies worth Rs 15,000 crore are unclaimed and the number is Rs 4,800 crore for matured fixed deposits (FDs).

The major reason why these are unclaimed is likely because nominees don't know they exist.

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(Edited by : Ajay Vaishnav)