LIC unclaimed funds hit ₹7,318 crore; EPFO inoperative accounts hold ₹9,330 crore
Synopsis
India's two largest financial safety nets — LIC and EPFO — are collectively sitting on over ₹16,600 crore in unclaimed or inoperative balances, Parliament was told on 20 July. While the government has ruled out diverting these funds, a new EPFO pilot to auto-credit small balances via Aadhaar signals that digital solutions, not legislation, are the chosen fix.
Key Takeaways
LIC holds ₹7,318.5 crore in unclaimed funds as of 31 March 2026 , comprising ₹5,564.5 crore in policyholder money and ₹1,753.95 crore in accrued income.
EPFO inoperative accounts hold ₹9,330.5 crore — balances where contributions have stopped but funds remain within the EPF corpus.
EPFO has launched a pilot to auto-credit up to ₹1,000 into eligible inoperative accounts linked with Aadhaar -verified beneficiaries.
The Finance Ministry confirmed there is no proposal to divert idle EPF balances for any purpose other than payment to rightful subscribers or their beneficiaries.
EPFO serves over 80 million active members ; ESIC covers over 150 million insured persons and their dependents.
State-owned Life Insurance Corporation of India (LIC) is sitting on ₹7,318.5 crore in unclaimed funds as of 31 March 2026, the Finance Ministry disclosed to Parliament on Monday, 20 July. The figure, revealed in a written reply, underscores the scale of dormant financial assets across India's insurance and retirement savings ecosystem.
Breakdown of LIC's Unclaimed Funds
Of the total ₹7,318.5 crore, ₹5,564.5 crore represents money directly owed to policyholders — maturity proceeds, death claims, and policy bonuses that have gone uncollected. The remaining ₹1,753.95 crore is accrued income generated on those idle balances. Both components remain legally payable to rightful claimants or their nominees.
EPFO's Inoperative Accounts: A Separate but Parallel Problem
The Employees' Provident Fund Organisation (EPFO) does not classify any account as formally 'unclaimed,' the government clarified. However, ₹9,330.5 crore is currently parked in inoperative EPF accounts — those where contributions have stopped and the account has remained inactive. This distinction is more than semantic: inoperative balances stay within the EPF corpus and continue earning interest, unlike unclaimed insurance proceeds.
To chip away at this backlog, EPFO has launched a pilot project to automatically credit balances of up to ₹1,000 directly into eligible inoperative accounts linked with Aadhaar-verified beneficiaries. The initiative is designed to reduce dormant account numbers and enable seamless transfer of small balances without requiring account holders to file manual claims.
Government Rules Out Diversion of Idle Funds
Responding to a separate parliamentary query, the Finance Ministry categorically stated there is no proposal under consideration to divert money lying in inoperative EPF accounts for any purpose other than payment to eligible subscribers or their beneficiaries. The assurance comes amid recurring concerns that idle retirement savings could be redirected to meet fiscal or infrastructure financing needs.
The government reiterated that all such funds remain payable to their rightful owners, and that digital processes — including Aadhaar-based authentication — are being expanded to accelerate identification, verification, and settlement.
Scale of India's Social Security Institutions
The disclosures highlight the administrative challenge facing two of India's largest social security bodies. EPFO currently serves over 80 million active members and 8 million pensioners, making it one of the world's largest retirement fund managers. The Employees' State Insurance Corporation (ESIC) provides healthcare and social security coverage to over 150 million insured persons and their dependents.
The government has maintained that continuous reforms in both EPFO and ESIC are aimed at expanding coverage, simplifying claim procedures, and improving service delivery through technology. With unclaimed and inoperative balances now drawing parliamentary attention, the pace of those reforms is likely to face closer scrutiny in the months ahead.
Point of View
600-crore-plus figure sitting idle across LIC and EPFO is not a new problem — it is a chronic one that successive governments have addressed with incremental digital fixes rather than structural reform. The Aadhaar auto-credit pilot is a sensible step for small balances, but the bulk of the LIC backlog — ₹5,564 crore owed directly to policyholders — demands a more aggressive outreach and claim-settlement framework. The government's assurance that EPF inoperative funds will not be diverted is necessary but insufficient: without a hard timeline for clearing the backlog, the assurance remains a parliamentary formality rather than a policy commitment.
NationPress
21 Jul 2026
Frequently Asked Questions
How much unclaimed money does LIC hold as of 2026?
LIC holds ₹7,318.5 crore in unclaimed funds as of 31 March 2026, according to the Finance Ministry's reply to Parliament on 20 July. This includes ₹5,564.5 crore owed directly to policyholders and ₹1,753.95 crore in accrued income on those balances.
What are EPFO inoperative accounts and how much do they hold?
EPFO inoperative accounts are those where employee contributions have stopped and the account has remained inactive. As of the latest parliamentary disclosure, these accounts collectively hold ₹9,330.5 crore, though EPFO does not classify them as 'unclaimed' since the funds continue to earn interest within the EPF corpus.
Will the government use idle EPF funds for other purposes?
No. The Finance Ministry has categorically stated there is no proposal under consideration to utilise money in inoperative EPF accounts for any purpose other than payment to eligible subscribers or their beneficiaries.
What is the EPFO Aadhaar auto-credit pilot project?
EPFO has launched a pilot initiative to automatically credit balances of up to ₹1,000 into eligible inoperative accounts that are linked with Aadhaar-verified beneficiaries. The aim is to reduce dormant accounts and transfer small balances to rightful holders without requiring manual claims.
How can LIC policyholders claim unclaimed funds?
Policyholders or their nominees can approach LIC directly with policy documents and identity proof to initiate a claim. The government has indicated that digital processes, including Aadhaar-based authentication, are being expanded to simplify and accelerate the settlement of unclaimed amounts.
