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MFs to invest unclaimed redemption and dividend amounts in liquid funds- SEBI Circular
Effective 1st April 2016, Mutual Fund AMCs are allowed to invest the unclaimed redemption and dividend amounts in a separate plan of a liquid / money market schemes which are meant exclusively for deploying unclaimed amounts. AMCs are not allowed to charge any exit load in these plans and the TER will be capped at 50 bps.

More details -
  • Create a new plan in any of the Liquid / Money market schemes for investing the unclaimed dividend/redemption
  • All unclaimed amounts need to be consolidated as per the first holder PAN
  • Provide the list of names, address of investors whose dividend/redemption amount is unclaimed in AMC website – to enable a validation and identification mechanism to display the details
  • AMC to provide online facility for investors to query by using folio/PAN, etc.
  • While the circular says Date of Birth, PAN, etc. in view of the non availability of these fields for many folios, we contemplate the above additional fields to validate
  • AMC need to proactively & clearly define the process to investor for claiming the unclaimed redemption / dividend amount once the investor finds his details in the list provided by AMC
  • Periodic communications need to be sent to investors clearly giving the details of unclaimed amount along with the current value separately
  • AMFI also to replicate similar display mechanism on their website
  • Investors who claim with in three years will get the unclaimed amount with total appreciation. Those who claim after three years will get the unclaimed amount together with the appreciation up to three years and the balance appreciation amount will get transferred to Investor Education Fund.
This will bring in a lot of ease and proactive communication / service from the industry in identifying the investors and also facilitate easy encashment.
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