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SEBI data reveals that the MF industry has unclaimed amount of over Rs.2600 crore in FY 2023. In FY 2022, the unclaimed amount of the MF industry was Rs.2500 crore.
Unclaimed amounts of mutual funds are on account of non-encashment of dividends and maturity proceeds by investors.
Of the total unclaimed amount, Rs.980 crore is due to unclaimed redemption. This indicates that majority of unclaimed amount i.e. Rs.1660 is in the form of dividend.
SEBI said, “The unclaimed redemption amount of mutual funds decreased by 1.70% to Rs.979 crore at the end of 2022-23 from Rs.995 crore at the end of 2021-22. But, the unclaimed dividend amount went up by 8% to Rs.1,659 crore in 2022-23 from Rs.1,539 crore in the previous year.”
These unclaimed amounts have accumulated over the years as many investors have lost track of their investments and may not have informed their fund house about the change in address; this problem gets further compounded in the absence of email address or change in mobile number. Further, bank accounts get changed and do not get updated in the folios or there is a name mismatch due to which the redemption or dividend proceeds does not get directly credited.
Further, frequent regulatory changes like linking of PAN or PEKRN with MF folios and linking of Aadhaar and PAN have added to the woes.
SEBI norms say that AMCs cannot take possession of the unclaimed corpus. Fund houses are supposed to deploy unclaimed proceeds in money market securities like liquid funds after three months.
If the claim is made within three years, then payment is based on the prevailing NAV after adding the income earned on unclaimed money. Claims made after three years are given the NAV at the end of 3 years. The additional interest amount will be transferred to the Investors Education and Protection Fund (IEPF) which is utilized for spreading financial education.
AMCs are allowed to charge a maximum 0.50% per annum as investment management and advisory fees though it is up to the AMC to decide if they wish to charge this fee. Some fund houses do not charge any fee for deploying these unclaimed proceeds.
Your clients can claim their unclaimed amount by filing up a form available with the respective fund house or RTA. The form needs to be duly signed and in case of any update, your clients need to submit the relevant documents.
Your clients can check details of unclaimed amount on RTA websites. They need to key in any of these details like PAN/PEKRN, folio number, mobile number, bank account number, dob and email. The system will display if your client has any unclaimed amount.
