The Securities and Exchange Board of India (Sebi) recently relaxed mutual fund (MF) norms on unclaimed investor money. The term unclaimed money includes unclaimed dividends and redemptions of MF units.
A scheme declares dividends out of the distributable surplus that it generates. An investor who has opted for the dividend payout option receives this dividend income in her bank account, mostly via electronic credit these days. In the past, when electronic credit was not as prevalent as it is today, the dividend cheque used to make a journey from the registrar's office to the investor's registered address. If an investor did not get this cheque, for whatever reason, it would not get cashed and would become 'unclaimed dividend'. Few other reasons for dividends to go unclaimed in the case of a physical instrument include change of address, a closed bank account, or the cheque becoming invalid after three months from being issued. With electronic credit, the most likely reasons can be a closed bank account, or the bank rejecting the credit due to mismatch in account details.
The case of unclaimed redemptions, however, is a bit odd. After all, redemption takes place based on explicit investor mandate, usually a physical instruction accompanied by signature, or through the Internet using secure login credentials. But in either case, there is still unclaimed redemption. An exception to this is the maturity proceeds from closed-end mutual funds. These schemes mature (auto-redeem) after a pre-defined tenure, and the redemption proceeds are sent to investor's bank account. The reasons for these redemptions going unclaimed are almost the same as for unclaimed dividends-issues with the bank account for electronic credit, and/or instrument not received with regards to cheques.
So, how big really is this 'unclaimed dividend' and 'unclaimed redemption' corpus? Here's a detailed report.
Is your money a part of this? How do you find out, and then claim it? Here is how. First up, ensure that your know-your-customer (KYC) information is up to date with the fund houses. To update details, use the 'KYC details change form', which is available on all fund houses' and registrar and transfer (R&T) agents' websites, as well as on the Association of Mutual Funds in India (Amfi) website. Once the information is updated in the KYC database, the same gets pulled into your MF statement. For example, if you have chosen the cheque payout mode for receiving dividends, you will receive the cheques on the updated address.
If you have closed your previous bank account, the procedure gets a bit tricky. For this, each fund house has its own form and procedure. The documentation involves an application accompanied with the old and new bank account details along with a cancelled cheque or passbook or account statement. This documentation has to be done offline and will entail a visit to fund house or R&T agent. Once the bank details are updated, you will have to send a letter requesting for credit of unclaimed dividend or redemption. The format for this is available online on respective MF's website. Even a plain paper request letter would do, if it contains requisite information, such as investor name, permanent account number (PAN), folio number, scheme name and default bank account details of the folio for proceeds to be credited.
If details have to be updated across several fund houses, don't go about vising various offices. Instead, use Mutual Fund Utilities (MFU)-the common transaction aggregation platform of the MF industry, which has been operational since 4 March 2015. Through MFU, you can update bank details in all fund houses and all folios via a single form.
If an investor has passed away, the nominee or legal heir will have to first complete the 'transmission' process to get MF units transferred on her name and then the same procedure can be used to claim pending amount. Seek help of the fund house, the R&T agent's staff or your adviser to complete the transmission process with proper documentation to avoid delay.
Last but not the least, in case old folio details are not available at all, there is a way out. In fact, this is where the latest Sebi circular helps immensely-it directs all MFs as well as Amfi to provide the details of unclaimed dividends and unclaimed redemptions on their websites, which can be accessed by providing proper credentials such as PAN, date of birth, and others.
Keep a track of the contents of the money box so that your dividends or redemptions do not go 'unclaimed'. Rs. 500 crore is not loose change.
Amol Joshi is founder, PlanRupee Investment Services.
In arrangement with HT Syndication | MINT
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
