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.
