A penny saved is a penny earned. Likewise, money claimed is money earned! If you are an investor with any unclaimed amount with a mutual fund (MF) AMC, claim it at the earliest and park it in more productive avenues.
So, what are unclaimed MF dividends and redemptions?
Failed bank transactions
MF houses make dividend and redemption-related payments through online modes such as RTGS and NEFT. But sometimes, these payments do not go through. The reasons for this can be many – an old bank account that has turned inactive in the absence of transactions, or an account that is not know your customer (KYC) compliant, or one where you have closed one bank account and not updated the mutual fund AMC about it.
In case of a failed fund transfer, the AMC sends a demand draft or a pay order to the investor’s registered address. Radhika Gupta, CEO of Edelweiss MF, says the investor must encash this within 90 days from the date of issue of the instrument. However, if the demand draft is undelivered due to an incorrect address or is delivered but not encashed by the investor within 90 days, the dividend/redemption amount becomes ‘unclaimed’. The AMC invests this money in an unclaimed plan (a designated overnight or money market or liquid fund) of the scheme in which the investment had been made.
So, what can investors do to claim this money? According to Sandeep Bhosle, VP, customer interaction, Quantum AMC, the investor must first update his new bank details in the MF folio and then send an email/write a letter to the AMC, which then releases the unclaimed amount into the new bank account after the new details are updated in their records. Currently, this process cannot be done online and typically takes up to 10 days for the formalities to be completed.
But what happens when an investor is not even aware that he has unclaimed money with an AMC?
The simplest way to figure this out is by going to the ‘unclaimed dividends and redemptions’ section on an AMC website. You can key in a few details such as your name, folio number, and PAN to find this out. Moreover, as Gupta points out, the moment an investor’s dividend/redemption amount becomes unclaimed, it gets invested in an unclaimed plan of the relevant scheme. Investors are sent SMS and email alerts intimating them about the allocation of units in the unclaimed plan. So, the chance of the investor not being aware is not that likely.
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