Laying claim to your orphaned MF investments

There are many ways in which a sum due to you may lie unclaimed with a mutual fund

Recently, I heard the story of 40-year-old homemaker Manjari Shah whose husband was admitted to the hospital after a heart attack. Soon after an angioplasty revealed three blocks in his arteries and the doctors scheduled a surgery for the next day, Shah forced his distraught wife to note down all his financial details — his PAN, Aadhaar number, bank account details and the usernames and passwords to his email and online investment accounts.

The doctors unfortunately couldn’t save him. But Manjari is today profusely grateful that her husband thought of her financial security in his last moments. Those last-minute details he shared with her made her aware of his mutual fund investments that have helped meet her financial needs in the past three years. Had he not done this, Manjari would have remained in the dark about those investments.

Lying unclaimed

The untimely demise of an investor without informing the heirs is just one of the situations in which a sum legitimately due to you may lie unclaimed with a mutual fund. There are other more common situations, too.

You may have invested in mutual funds in the pre-2006 era and failed to update your email, PAN or KYC details with the fund. You may have made a paper investment and forgotten about it. You may have changed your bank account, address or email ID after investing, and failed to intimate the fund or registrar about it. There may be a mismatch between your account details as captured by the AMC and those at your bank, leading to dividend or redemption warrants bouncing.

While there is no official estimate of the total money lying unclaimed with Indian mutual funds, guestimates put it at many thousands of crores. As AMCs earn their fees on assets managed, there is really no incentive for them to reach out to you to return this investment.

This makes it important for every investor to run a check to see if there are any unclaimed MF investments in his or her name.

Unclaimed amounts

How do you do it? Well, it is easier if your unclaimed amount relates to unclaimed dividends or redemption proceeds from a fund, where the cheque or warrant was not cashed. SEBI has a clear set of regulations on how MFs should treat such cases.

AMCs are required to invest these sums in a separate liquid fund, charging a management fee capped at 0.50 per cent of assets. They are also required to provide a section on their website, where investors can check for unclaimed amounts in their name. The AMFI website (www.amfiindia.com) has links to this section for all the 40-odd AMCs. Each MF site typically asks you to input two or more personal details — your name, PAN, folio number, date of birth, bank account number — before it allows you to check for any unclaimed amount.

But most investors will not readily know which AMC to check with, and checking 40-plus AMCs is certainly not feasible. Therefore, the more practical option is to check for unclaimed amounts across multiple AMCs through their registrars — CAMS and Karvy. Both registrars allow you to check for unclaimed dividends or redemption amounts across funds serviced by them, if you provide your PAN and folio number, plus other details (bank account, email, mobile number, date of birth).

If you trace an unclaimed amount, you have to submit an application form with the required documents to the registrar or the fund house to claim it. If you claim it within three years of its due date, you will receive your unclaimed sum along with the returns earned on it. Beyond three years, you will receive the investment value that existed at the end of the third year, but not the returns earned after it.

Other slip-ups

But the above procedure applies only to dividend payouts or redemption proceeds from funds, which are lying unclaimed. It will not help you lay claim to MF investments left behind by a relative or spouse who has passed away. Nor will it reflect investments where you failed to update your KYC, provided incorrect bank details, or have forgotten about.

In fact, if such unclaimed amounts belonging to you are in the growth options of open-end funds, the sum will not be treated as an unclaimed amount by the AMC; it will simply assume that you are an ultra-long-term investor.

Locating and claiming such investments can be a painful task. If you believe that a recently deceased relative may have had MFs in his or her name, or that you have such forgotten investments, you can use the CAMS website to request a consolidated accounts statement, this only requires a registered email ID. You can then follow up with individual funds.

But when it comes to retrieving amounts due to you from MFs, prevention is much easier than cure. Spare those extra few minutes every week to check your mail, update KYC details, and maintain a physical record of all the investments made. Manjari’s case is also a good reminder to all of us to keep our nominee and KYC details updated in our MF investments while we are hale and hearty.

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