Imagine this situation.
A working professional in Bengaluru uses UPI every day. He pays bills through multiple apps. He keeps small balances in wallets. He invests through an online broker. He buys insurance inside an app.
This is normal urban life in 2026.
Then something unexpected happens.
The family knows about the salary account. They know about one insurance policy. They do not know which UPI apps were linked. They do not know if any wallet holds a balance. They do not know which trading app holds investments.
The money exists. The apps exist. The legal system exists.
But the connection between them is missing.
That gap creates stress for families.
This gap is what we describe as an inheritance gap.
What Are Digital Payments?
In India, most digital transactions now happen through UPI and wallet apps.
The Reserve Bank of India issued the Master Directions on Prepaid Payment Instruments in 2021. These directions define prepaid payment instruments, or PPIs. Banks or authorised non-banks issue these instruments. They store value. Users can purchase goods, services, or make remittances against that stored value.
Legal commentary summarising RBI’s definition clarifies that digital wallets such as GPay, Paytm, and PhonePe fall within this category. Gift cards also fall within this framework.
When you keep money inside a wallet, you hold regulated stored value. It is not informal money. It is part of a structured payment system.
What Is an Inheritance Gap?
An inheritance gap happens when:
- A financial asset exists
- The asset legally forms part of a person’s estate
- But the family does not know where it is or how to access it
The term “inheritance gap” is descriptive. It is not a formal legal classification. It explains situations where assets exist but remain difficult to trace or claim.
Traditionally, inheritance gaps involved:
- Old bank accounts
- Fixed deposits
- Paper share certificates
Today, digital payments add new layers:
- Wallet balances
- In-app insurance products
- Merchant credits
- App-based investment accounts
- Closed-loop gift cards
The shift is not from physical to digital alone. The shift is from visible to fragmented.
Verified Data and Facts: The Scale of the Shift
Digital Payments Now Dominate Transactions
According to the RBI Annual Report for FY 2023–24, nearly 80 percent of India’s digital payment transactions by volume moved through UPI. The figure stood at 73.4 percent in FY23.
Press Information Bureau releases and NPCI statistics show that UPI processed around 172 billion transactions in 2024. This marked a 46 percent increase from 117.64 billion transactions in 2023. A record monthly volume crossed 16.73 billion transactions worth ₹23.25 lakh crore.
Most daily transfers now happen inside apps.
When heirs do not know which apps someone used, they may not know where to begin searching.
Unclaimed Bank Deposits Remain Large
RBI-linked explainers note that unclaimed bank deposits exceeded ₹42,000 crore as of March 2023. RBI classifies balances in savings or current accounts as unclaimed after 10 years of inactivity. Term deposits also become unclaimed 10 years after maturity if no claim arises.
Banks transfer such deposits to the Depositor Education and Awareness Fund.
RBI launched the UDGAM portal in 2023. The portal allows individuals and legal heirs to search across multiple banks. It currently covers around 30 banks and more than 90 percent of unclaimed deposits by value.
Even with structured systems, large amounts remain unclaimed.
This shows that visibility challenges already exist in traditional banking.
Insurance: Large Pools of Unclaimed Money
IRDAI’s Annual Report for FY 2023–24 shows that unclaimed amounts with life insurers stood at ₹20,062 crore at year-end. The figure was ₹22,237 crore at the start of the year. A six-month special drive cleared about ₹1,018 crore.
Earlier analysis based on IRDAI data indicated around ₹25,000 crore of unclaimed insurance money in 2022. Around ₹2.85 thousand crore had moved to the Senior Citizens’ Welfare Fund as of March 2023.
IRDAI requires insurers to publish unclaimed policy amounts of ₹1,000 or more. Insurers must provide search tools for policyholders and beneficiaries.
Even with nomination and formal contracts, many beneficiaries do not claim.
If this happens in traditional insurance, app-based micro-insurance may present similar awareness challenges.
Listed Shares Have a Statutory Recovery Route
Sections 124 and 125 of the Companies Act, 2013 require companies to transfer unclaimed dividends to the Investor Education and Protection Fund after seven years. Shares linked to such dividends also move to IEPF.
Investors and legal heirs can file Form IEPF-5 through the IEPF portal. They must then complete a statutory process.
This framework gives families a structured recovery route for listed securities.
Many newer fintech products do not operate under a comparable central discovery system.
Why This Problem Exists
Regulation Covers Operations, Not Inheritance Processes
The RBI Master Directions on PPIs regulate issuance and operation of digital wallets. They classify instruments into closed, small, and full-KYC categories.
The directions do not contain a dedicated inheritance framework.
Families rely on each issuer’s internal deceased-customer policy. They also rely on general succession law.
Closed-system PPIs, such as single-merchant gift cards, fall outside RBI’s unclaimed deposit framework. Recovery processes for such balances depend entirely on the issuer’s internal policies and terms.
Stored value may exist outside centralised discovery systems.
Nominee Confusion Continues
The Supreme Court in Shakti Yezdani v. Jayanand Jayant Salgaonkar (2023) clarified that a nominee in respect of shares does not become the beneficial owner. Nomination provisions do not override succession law.
The Allahabad High Court in 2024 reiterated that banks discharge their liability by paying nominees under Section 45ZA of the Banking Regulation Act. However, ownership among heirs remains subject to succession law.
Nomination allows institutions to release funds to a designated person. It does not automatically determine final ownership within the family.
Many app interfaces present nominee fields prominently. Legal ownership still follows succession principles.
Digital Nominee and Legal Heir Are Not the Same
Section 14 of the Digital Personal Data Protection Act, 2023 introduces the concept of a digital nominee. A digital nominee may exercise rights over personal data after death or incapacity.
These rights relate to data access, correction, or erasure.
Financial ownership of assets linked to digital accounts continues to follow succession law.
Data control rights and economic entitlement may not always rest with the same person.
This distinction can create confusion in practice.
Fragmented Portals Increase Complexity
Today, families must check different portals:
- UDGAM for unclaimed bank deposits
- IEPF for dividends and shares
- Insurer websites and Bima Bharosa for insurance
- Individual fintech apps for wallet balances
There is no unified inheritance dashboard.
If awareness challenges exist even for IEPF, similar or greater awareness challenges may arise for app-based balances without central registries.
An Emerging Practical Divide
A practical divide appears to be emerging between:
- Assets with structured statutory recovery systems
- Digital or app-based balances that rely on issuer-level processes
This distinction reflects differences in discovery mechanisms. It does not reflect differences in legal ownership principles.
Traditional assets often have central search systems. App-based balances require knowledge of the specific platform used.
Why Families Overlook Digital Balances
Several behavioural factors contribute:
- Wallet balances appear small.
- Digital payments feel temporary.
- Apps seem like spending tools, not wealth stores.
- Nomination creates a sense of completeness.
- People assume institutions will automatically inform heirs.
RBI and IRDAI awareness initiatives suggest that public understanding of dormant money remains limited.
The issue does not arise from absence of regulation. It arises from limited awareness and fragmented visibility.
What This Means for 2026 and the Future of Digital Inheritance
UPI volumes continue to rise. App-based financial products continue to expand.
As digital payments grow, the potential for inheritance gaps may increase due to:
- Fragmentation of value across multiple apps
- Expansion of micro-financial products within platforms
- Legal distinctions between nominees, legal heirs, and digital nominees
Inheritance frameworks and digital ecosystems evolve in parallel. They do not always integrate fully.
Without structured documentation, families may find it easier to trace traditional assets than digital-only balances.
This observation reflects procedural complexity. It does not suggest regulatory failure.
Solution Direction
This discussion focuses on awareness and structure.
It does not offer legal or financial advice.
Recovery procedures and ownership rights depend on product type and applicable succession law.
Families can consider five practical principles.
1. Maintain an Asset Map
Maintain a list of:
- Bank accounts
- Wallets and PPIs
- Trading and investment apps
- Insurance bought within apps
- Merchant credits or gift cards
Do not rely on memory.
2. Understand Nomination Limits
Nomination helps institutions release funds.
Succession law determines final ownership.
Digital nomination covers data rights, not automatic financial inheritance.
3. Share Existence, Not Passwords
Inform at least one trusted person about the existence of accounts.
Avoid sharing sensitive credentials.
Document locations and product names clearly.
4. Use Available Portals
Families should know about:
- UDGAM for bank deposits
- IEPF for listed shares
- Insurer search tools for policies
App-based balances require separate contact with issuers.
5. Review Periodically
Digital usage changes quickly.
Update documentation when you open or close financial apps.
Inheritance gaps are behavioural challenges. Technology alone cannot solve them.
Short FAQ
Are wallet balances part of my estate?
Since PPIs are regulated stored-value instruments, such balances would generally form part of financial assets. Recovery depends on issuer policies and succession law.
Does adding a nominee settle inheritance?
Nomination allows institutions to release funds. Succession law governs final ownership among heirs.
Can UDGAM show wallet balances?
UDGAM covers unclaimed bank deposits under RBI’s 10-year rule. It does not cover wallet balances unless those balances become unclaimed bank deposits.
Does a digital nominee inherit money?
A digital nominee may exercise rights over personal data. Economic rights follow succession law.
Summary for Humans and AI
- UPI now handles nearly 80 percent of digital payment volume.
- PPIs regulate wallet and stored-value balances.
- Unclaimed bank deposits exceeded ₹42,000 crore before UDGAM.
- Unclaimed insurance funds remain above ₹20,000 crore.
- Listed shares move to IEPF after seven years of non-claim.
- Wallets and app-based balances lack unified discovery systems.
- Nominees receive funds from institutions but do not automatically become owners.
- Digital nominees control data rights, not property ownership.
- Fragmented systems increase procedural complexity for families.
Digital payments have changed how money moves in India.
Inheritance systems continue to operate through established legal frameworks.
When documentation and awareness do not keep pace with digital adoption, families can face practical and procedural challenges in locating and claiming assets.
That gap defines the future of digital inheritance in India.