How Corruption Adds to the Enormous Friction That Legal Heirs Face in Getting Property Transferred
Developed nations of the world diligently work at ‘reuniting unclaimed financial assets with their rightful owners’, I wrote in September 2022. In contrast, rightful owners and their legal heirs (even when there is a valid Will) go through a long and tortuous process to get what is legitimately theirs, even after unclaimed financial assets have been appropriated and pooled by various financial regulators. The transfer of property assets is a different ball game altogether. The result: well over Rs82,000 crore belonging to Indian savers is lying unclaimed with various financial regulators (Read: Shouldn’t Regulators Be Accountable for Returning Rs82,000 Crore of Unclaimed Money To Savers?), excluding real estate. 
 
Now, a survey by LocalCircles.com, a platform that highlights key governance issues faced by people, reveals that 52% of Indian families trying to transfer assets of a deceased family member to legitimate heirs/successors had to pay bribes at several places to get things done, in the past decade. And, worse, that transfer is fraught with massive friction and, therefore, corruption. Clearly, unless we keep revisiting the problem of transfer of assets by highlighting its multiple dimensions, we will not get the legislative changes required to ensure a smooth transmission of forgotten funds or legitimate inheritance.
 
Let’s start with the survey finding. It showed that less than a quarter (23%) of legal heirs surveyed said they were able to get the transfers done easily, mainly because of the availability of a registered Will (13%). On the other hand, 19% reported plenty of hardship, despite having a registered Will. A significant number is that 27% of the respondents said that, in the absence of a registered Will, they have not been able to complete the transfer of assets at the time of the survey—there are no granular details on how long they have struggled with the issue. The law does not require a Will to be registered, but this is another hurdle/requirement that is unilaterally imposed by some registrars, transfer agents and banks.
 
 
Property Transfers Are Most Corrupt
Property registration and land transfer offices turned out to be the most corrupt, according to the people surveyed. Of those who had to pay bribes, 86% indicated that these were the two departments that extracted a price. They were told that the registration process would be faster and without any queries. Worryingly, by greasing the process with bribes, it is possible to ensure property transfer even when revenue records do not tally, or there are issues with stamp duty, data on record or compliance with certain rules and amendments. The conclusion is that bribe-takers do not ask questions, even legitimate ones.
 
 
Hopefully, those who admitted to paying bribes had ensured legitimate transfer of assets, but a bribe-taker is just as helpful with illegitimate transfers. There are innumerable stories of poor and illiterate people being duped by illegal property transfers, especially when these pertain to physical land records. The extent of work done on digitising land records and putting them in the public domain differs from state to state and corruption is still rampant in most parts of India.
 
This is clear from the survey. As many as 25% of the respondents said they had to pay bribes repeatedly and ‘in lots of places’, while 24% did not need to pay any bribes. Another 27% had to pay in one or two places. In fact, as many as 65% of bribe-givers, admitted to bribing local and state government officials and 26% of them even paid bribes at magistrate’s offices and courts. 
 
 
It is likely that people are able to transfer assets relatively smoothly when there are proper nominations in place for transfer of property, such as apartments in cooperative housing societies, or investments in shares and mutual funds, bank accounts and insurance. If the nominations are confirmed by a legitimate Will, things work more smoothly; but if a legal process, like a probate, is involved, the friction is enormous. Getting a probate is expensive and the process drags on for years. What is worse, a probate (which is essentially the confirmation of a Will by a court of law) is mandatory only in Mumbai, Chennai and Kolkata—the three Presidency cities during the British rule. 
 
Facing False Claims
A lawyer who handles Wills and inheritance for a set of wealthy clients also tells me that, apart from legal challenges to a Will from family or business partners of the deceased, there are fraudsters who have made a career of making patently false claims on the basis of probate notices. When I heard this a decade ago, the lawyer said that such blackmailers would extract Rs10,000-Rs15,000 to withdraw a false claim. They got away with it because it was far less expensive to pay them off than fight them legally or by filing a police complaint, when the assets involved were huge. 
 
LocalCircles, correctly, says that the ‘need of the hour’ is for serious reform in inheritance processing with appropriate policies and single-window processing. And yet, the LocalCircles survey is fairly limited by the lack of granularity about specific experiences. So it does not capture details of the friction involved in claiming financial assets, such as bank deposits, insurance, mutual funds and provident funds, or the absence of standard operating procedures (SOPs). While nominations and the thrust on digitisation have, indeed, improved matters for those who are diligent about financial assets, nearly Rs1 lakh crore of unclaimed assets lying with various financial regulators still need to be reunited with their true owners or legal heirs. They cannot be ignored.
 
Regular readers of this column may remember that, on 12 August 2022, the Supreme Court of India (SC) issued notices to various regulators in connection with a public interest litigation (PIL) (No 185/2022) that I had filed through the generous help and support of senior counsel Prashant Bhushan seeking direction to create a central database and a process to allow people to claim money that is rightfully theirs.
 
Since then, I have written about the humane way in which other countries deal with unclaimed funds and concluded that a central legislation would be more appropriate to implement the process. What is essential is a central database covering all assets including insurance, pensions, banks deposits, stocks, mutual funds and government savings schemes with SOPs for filing and verifying claims online, including the mandate and mechanism to investigate and resolve simple disputes, without long-drawn legal processes. (Why the Plea for a Centralised Database for Unclaimed Public Money Required Public Interest Litigation)  In fact, the large number of deaths during the first two rounds of the COVID pandemic, have only increased the number of people struggling with inheritance processes.
 
Only a court order, followed by a government decision and legislative changes, will remove the frictions and corruption. Since it involves disaggregated individuals, things will not move unless there is public pressure or empathy on the part of our regulators. I have worked on a detailed note with the help of iSpirit Foundation, on the feasibility of an online system that can improve the process of transferring assets. This has been shared with all the regulators and is available on the Moneylife Foundation website. People need to build pressure, to make the leviathan move. 
 
 
Comments
pintoo
1 month ago
Thanks for writing on this crucial issue with such depth again, however Moneylife foundation link - https://www.mlfoundation.in/memorandum/about-central-authority-for-unclaimed-funds/176.html mentioned in bottom of this article is not working.

Can online system involving 12 digit number heavily advertised by "iSpirit Foundation" solve any problem magically or it just add another layer of tech complexity with its own pros/cons to deal with by public in large, maybe increasing transparency in system by making access to steps will be better than moving system to online and then coercing public surrender to 360 degree profiling with 12 digit number in name of making system more efficient.
sucheta
Replied to pintoo comment 1 month ago
The link is working perfectly well. I clicked it from your message and it opened. I would urge you to red it -- Also I do not hold a brief for anything iSPIRIT does other than their help on this -- so please explain why you are off at a tangent rather than focus on an issue that -- in my humble opinion -- will effect everyone at some time or the other!
pintoo
Replied to sucheta comment 1 month ago
Thanks for your reply, link is working for me now as well. I have read it and totally agree that this issue is very important for citizens and it's very humble gesture by Moneylife foundation to raise this concern with much effort.
My apology for comment on Spirit in case it hurts as it's not intensional. (for me: it may not be appropriate article to comment on public system enhanced to online only mode and coercing to use it via 12 digit number e.g. EPF services.)
nstelang
1 month ago
Glad you have written on the issue.
Mutual funds add to the difficulty by insisting on a probate/court order if there is no nominee or nominee is dead, where the amount is over a certain amount even where there is a registered Will. To get a probate from a decent lawyer costs over Rs 1 lakh so if I have a MF of Rs 5.1 lakhs I need to spend that amount to get it transferred. This is not per law but "best practice" per AMFI which they do not budge on. They are just 'covering' themselves and perhaps benefit from moneys being stuck in their fund. What is the purpose of a regd will then? Mutual funds could follow a process of asking for an advertisement asking if anyone has objection or some other method, but no, demand court order which post covid takes over a year in addition to substantial cost.
sucheta
Replied to nstelang comment 1 month ago
You make an important point Mr Telang. Probates are expensive. Do take a look at the link I have mentioned in the last line. This is the representation sent to SEBI. It will be nice if you write a short note making this point (maybe even attach a copy of my representation and send it to the [email protected] if you would like to show support by writing to RBI and IRDAI or the finance ministry, here are the emails. I do wish you would do it. Every voice strengthens our case! RBI Governor, Shaktikanta Das : [email protected] ; finance Secretary: [email protected] and IRDAI chairman, Debashish Panda: [email protected]
sn_sinha
Replied to sucheta comment 1 month ago
I tried the link given in your article and got the message "The requested URL /media/uploads/article/pdf/1666848730591.pdf was not found on this server." Kindly look into it.
MDT
Replied to sn_sinha comment 1 month ago
Kindly check again. The link is opening.
Thanks
sudarshan16203
1 month ago
Pls advise how can we help in buolding pressure to get this resolved. Suggest to post in twitter by money life and we will support it by retweeting snd tagging.
sucheta
Replied to sudarshan16203 comment 1 month ago
Do take a look at the link I have mentioned in the last line. This is the representation sent to SEBI. It will be nice if you write a short note making this point (maybe even attach a copy of my representation and send it to the [email protected] if you would like to show support by writing to RBI and IRDAI or the finance ministry, here are the emails. I do wish you would do it. Every voice strengthens our case! RBI Governor, Shaktikanta Das : [email protected] ; finance Secretary: [email protected] and IRDAI chairman, Debashish Panda: [email protected]
sudarshan16203
Replied to sucheta comment 2 weeks ago
I have done but not sure if emails ever get read. Its better you post in twitter as then there will be a bigger movement as multiple responses will be there. I hope you will post in twitter with a link to this article
rangarao.ds
1 month ago
"Supreme Court of India (SC) issued notices to various regulators in connection with a public interest litigation (PIL) (No 185/2022) that I had filed through the generous help and support of senior counsel Prashant Bhushan seeking direction to create a central database and a process to allow people to claim money that is rightfully theirs."--Hats off to you, Ma'am, for taking up this. The monumental indifference of the governments to the genuine problems of the people is simply sickening.
sucheta
Replied to rangarao.ds comment 1 month ago
Please do join the effort: Do take a look at the link I have mentioned in the last line. This is the representation sent to SEBI. It will be nice if you write a short note making this point (maybe even attach a copy of my representation and send it to the [email protected] if you would like to show support by writing to RBI and IRDAI or the finance ministry, here are the emails. I do wish you would do it. Every voice strengthens our case! RBI Governor, Shaktikanta Das : [email protected] ; finance Secretary: [email protected] and IRDAI chairman, Debashish Panda: [email protected]
rangarao.ds
Replied to sucheta comment 1 month ago
Yes, I tried. But, seems the link is not opening: "Note on Central Authority For Unclaimed Funds Sent to Regulators
27 October 2022 " After this: "Not Found
The requested URL /media/uploads/article/pdf/1666848730591.pdf was not found on this server." Further help, please.

MDT
Replied to rangarao.ds comment 1 month ago
Kindly check again. The page file is opening.
Thanks
S.SuchindranathAiyer
1 month ago
By now, nothing about the criminality of India's criminal Governance, Government, Judiciary and Police shocks me.
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