Getting your unclaimed mutual fund money

Keep all your paperwork and details up-to-date to make the claims process as seamless as possible

Shivakumar Shamarao, 42, a Bengaluru-based doctor, received a call from HDFC Asset Management Co. Ltd a couple of weeks back informing him that they have an unclaimed redemption of his investment with the fund house from 2007, and as he had not opted for Real Time Gross Settlement facility, they wanted to send a cheque instead, but did not have his updated address. “I had made the investment when I used to live in Chennai through my ICICI Bank Ltd account. When I shifted to Bengaluru in 2008, I transferred my bank accounts but somehow missed updating the details with the fund house," he said, adding that he is now getting this resolved through his financial planning firm.

Other mutual fund (MF) investors, too, may be getting similar intimations because according to a 25 February notification from the Securities and Exchange Board of India (Sebi), it is now mandatory for fund houses to disclose details related to unclaimed dividends and redemptions of all MF schemes on their websites from 1 April. The Association of Mutual Funds in India (Amfi) also has to provide on its website the consolidated list of investors in whose folios there are unclaimed amounts. It will contain the investor’s name, address, and name of MF(s) with whom the unclaimed amount lies. “Mutual funds shall be required to provide on their website, the list of names and addresses of investors in whose folios there are unclaimed amounts," the Sebi circular stated. Fund houses also are required to provide information on the process to claim this unclaimed amount and necessary forms or documents.

This rule has made it possible for people such as Shamarao who made an MF investment a long time back when all details were not available online and forgot to update their details, to get their unclaimed money.

“This (facility) is of particular use to investors who use paper-based forms to apply and forget about their investments since they are not consolidated in one place. If someone comes across a statement and wants to know if there are unclaimed units there, they can use this (facility). This would be useful when investments are made in the name of a person who is now deceased," said Srikanth Meenakshi, co-founder and chief operating officer,

So, how big really is this unclaimed dividend and unclaimed redemption corpus? ICICI Prudential Asset Management Co. Ltd, the biggest mutual fund company by assets under management (AUM) during January-March 2016, had total unclaimed amount of 49.47 crore as on 31 March 2015, according to the fund house’s annual report. HDFC AMC, had a total unclaimed amount of 65.21 crore, and Reliance Capital Asset Management Ltd, the third largest, had 46.91 crore.

How the unclaimed amount comes about

An MF generally offers two types of schemes: dividend and growth. The dividend option does not re-invest the profits made by the fund through its investments. Instead, the money is given to investors from time to time. In a growth scheme, all profits made by the fund are ploughed back into the scheme. This causes the net asset value (NAV) to rise over time.

Redemption is when you exit the fund; in other words, the MF buys back all the units from you.

According to Sebi regulations, once the dividend or redemption amount on a fund is unclaimed for over three years, the interest on the principal amount after this period is to be used for investor education funds by the fund houses.

MFs say they have been regularly informing customers about unclaimed amounts and that it is mentioned in the account statements too. Experts say that such investors are likely to be there in old fund houses and not the new ones, as all investment-related details are now available online. “We do not have any unclaimed dividend or redemption amount. As the company is relatively new, we have less or no chances of people who invested in paper-format," said Jimmy Patel, chief executive officer, Quantum Asset Management Co. Pvt. Ltd, which started operations in March 2006.

MFs that have been there for longer do have unclaimed money but they say they have been informing their customers. “We have been regularly informing all customers about it and if you see our numbers, our total outgo in unclaimed funds has increased in the last three years. In the financial year (FY) 2015-16, we gave out around 65 crore in unclaimed dividends and redemptions," said Suraj Kaeley, group president, sales and marketing, UTI Mutual Fund. He added that it is important for investors to update their details whenever they change their address or a bank account.

Claiming the funds

If you find an old receipt of an investment, visit the website of the MF and click on the unclaimed dividend and redemption section. There you would have to provide at least one of the following details—Permanent Account Number (PAN), folio number and account number—and one detail out of date of birth, name, mobile phone number or email address. If there is no unclaimed money, the message will indicate that no details were found for this folio. If there is an outstanding amount, then you need to fill a form, which is available on the website as unclaimed dividend and redemption form, and send it to the company, which will then process it and send the amount to you via a cheque or to your new bank account.

“If the investor’s know-your-customer (KYC) formalities are done, it takes around 2-3 days for the whole process of sending the money through cheque of the opted bank account. We also give the customer an option to reinvest the money in the scheme or show other investment options," said Kaeley.

When you receive the cheque, make sure it is not payable to your old account number but the new one. If KYC is done, proceeds go to your primary registered account. If not, you can choose another bank account.

If you have found an investment of a deceased relative and you are the nominee, or heir, then first check if there is any outstanding amount to be received. If yes, then fill the respective form and submit along with it documents such as the death certificate and those that prove that you are the correct heir to the investments.

Things to remember

With old accounts or ones where the investment was done in paper format, chances are that you might have lost the receipt. Also, many old bank account numbers have changed.

“There are old accounts such as the ones opened before 2006 when paper-format was the way to go for MFs. Also, some investors did not invest through a financial adviser. They may have stopped investing after that or lost touch with the investment," said Srikanth Bhagavat, managing director and principal adviser of Bengaluru-based financial advisory Hexagon Capital Advisors Pvt. Ltd.

It is important to maintain all receipts of your investments. While most details are now available online, there may be some investments that were made a long time ago and those details are not available online.

Since there is a regulatory mechanism and MFs are aiding the procedure online, it should not be difficult to get your unclaimed money if all the paperwork and details are in place.