If you haven't claimed your dividends for more than three years now, you should proactively initiate the process of recovering the amount as the regulator Securities and Exchange Board of India (Sebi) has tweaked the norms related to unclaimed money this financial year onward.
Sujata Vihire had initiated mutual fund investments immediately after receiving her first salary, upon suggestion from her brother. Few years later, she moved out of her rented premises to a new home. Though she carefully relocated all her belongings to the new house, she forgot to inform her mutual fund house about the new communication address. The dividend warrants issued under the mutual fund scheme lay quietly in the abandoned letter box.
Another businessman, Pawan Hodkar, found a neighbourhood bank's facility rewarding and decided to switch his bank account. He noted the change in his income tax returns but failed to consider the dividends and the redemption proceeds of the amount he had parked in a mutual fund scheme through the account.
These aren't just a handful of cases. As per estimates, such unclaimed dividends stack up to Rs 510.56 crore belonging to nearly 27.7 lakh mutual fund folios, as on November 30,2014, based on the disclosures made by fund houses.
If you haven't claimed your dividends for more than three years now, you should proactively initiate the process of recovering the amount as the regulator Securities and Exchange Board of India (Sebi) has tweaked the norms related to unclaimed money this financial year onward.
New rules
Hitherto, fund houses invested such unclaimed funds in money market funds.
But from April 1, 2016, investors who claim the unclaimed amounts during a period of three years from the due date would be paid the initial unclaimed amount as well as the income earned on it by way of investment.
However, investors who claim these funds after 3 years would be paid the unclaimed amount and the income earned on it only till the end of the third year. "After the third year, the income earned on such unclaimed amounts shall be used for the purpose of investor education,"Sebi said in a circular.
So, after the third year, the fund would be lying idle and you won't earn any investment income on it.
A positive out is that tracing such unclaimed funds would be hassle-free as the mutual fund industry body Association of Mutual Funds in India (Amfi), and all fund houses have been asked to put up a list of the investors, whose folios contain unclaimed money. They also need to be informed about the unclaimed amount along with its prevailing value through periodic statement of accounts.
The investment vehicles where they can be parked too have been notified. Such unclaimed redemption and dividend amounts have to be invested in a separate plan of liquid schemes, starting April 1, 2016.
Unclaimed Funds
The advent of technology has ensured that dividends and redemption proceeds land up directly in the bank accounts electronically. But in the 1990s, the electronic clearing system was non-existent and hence dividend warrants or cheques would be used. If the dividend cheques go unnoticed for the validity period, they would have to be freshly issued.
Come circa 2016, and you no longer have to wait for a fresh cheque to encash your unclaimed funds.
How to Claim It
Each fund house has a page on its website that would lead you to the unclaimed dividends and redemption amount. To ensure that the actual investor is claiming the amount, a few mandatory disclosures need to be made such as PAN, folio number and the name as mentioned in the folio.
Apart from the asset management companies' website, you can also trace your unclaimed amount via the Amfi website or the registrar and share transfer agent's website such as www.camsonline.com or www.karvymfs.com. Provide the necessary verification credentials, as requested on the website. Upon successful verification and existence of any unclaimed amount, your name and address will be displayed on the screen.
A letter – containing details of folio number, units or amount, bank account details for electronic transfer – would be required to claim the amount. The format can be easily downloaded from the AMC, Amfi or registrar's website.
If you have misplaced your old dividend or redemption warrant, then you would also be required to submit an indemnity bond along with the letter. If the nominees are claiming the amount, they will have to submit proof of identity.
The form along with the necessary proofs needs to be submitted at any of the centres of the fund house or the registrar. Post verification, you would receive the funds in your account within a fortnight.
An important way to avoid piling up unclaimed dividends is to update your contact details registered with the fund house. So, when you change your bank account or address, ensure you notify your mutual fund house about the same. Chances are you would stumble upon a treasure of unclaimed amount while doing so.
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