Crores of rupees in unclaimed money - right from old provident fund amounts when you left your earlier jobs to insurance payouts to share application money and more - is piling up but rightful owners are yet to get their hands on it. Businesses could owe you plenty of money, especially if you have been working for long or investing actively or saving regularly. But it is not uncommon to lose track of that money mostly because investments were made and policies were bought a long time ago, and you have forgotten all about it. As of now, about `1,56,539 crore is lying with various financial institutions as unclaimed money (see table Where Is The Money), with small savings plans, Employees' Provident Fund Organisation (EPFO) and banks leading the list. The government has, however, started looking at the issue and measures are being taken to transfer it to legal owners or use it for the benefit of the society.
There are several reasons why the money does not get claimed. As mentioned earlier, you might have lost track of the funds owed to you. Or a company/financial institution might have failed to locate you for payment as contact details change over the years but are not updated on a regular basis. Even nominees and legal heirs may fail to stake a claim if they are not aware of such assets - it is often the case if one dies without making a will.
Vikash Jain, Director of Share Samadhan, a Delhi-based company that recovers unclaimed and lost investments, cites one of its cases. Radhika Singh (name changed), daughter of Ranjit Singh from Jharkhand, was not aware of the investments made by her father; neither had she the complete records of those investments. After a few years of her father's death, she received a letter from ITC containing dividends from some stocks that her father had purchased. She approached Share Samadhan for a full recovery, and the company recovered 1,73,880 shares. The total value of the stocks turned out to be `4.92 crore, and the dividends received amounted to `48.77 lakh.
The procedure to claim your 'lost' money is not too difficult, though. The Reserve Bank of India (RBI) has mandated all banks and financial institutions to publish on their respective websites details of accounts, which have remained inactive or inoperative for 10 years or more. To track if you have any unclaimed fund lying around, run a search on relevant websites and see what turns up. Once you have traced the money, follow the appropriate to-do list below, and you will get it back.
Recovering PF, Pension Money
In May 2016, the government stated that about `43,000 crore was lying in inoperative EPF (Employees' Provident Fund) accounts although the definition of inactive account changed post the November 2016 notification. Earlier, if a person stopped contributing towards PF for three years or more, the account became inactive. But now an account is termed inoperative three years after a person's retirement if he/she is at least 55.
The reason why so much money is lying unclaimed with the Employees' Provident Fund Organisation (EPFO) is that many people have discontinued their accounts long ago, but their deposits are still earning interest. On the other hand, any unclaimed pension money is also transferred to EPFO accounts, further adding to the cash pile-up.
"People come to claim their old money, but it is a grey area. The identification of the person could be difficult, and we need to cross-check and ensure the same as it is trust money. In most cases, there is no way to ascertain the identity of the rightful owner," a senior EPFO official says requesting anonymity. Getting the PF money transferred to one's bank account tends to get complicated, and at times, people just leave it although the amount is growing over the years, the person adds. "Now we are insisting on Aadhaar as it gives us biometric identification of an individual and makes it easier to find the rightful owner."
For people whose universal account numbers or UANs are Aadhaar-linked and have been cross-checked by the Unique Identification Authority of India, there is no need to provide any further proof. All claim submissions and fund transfers can be done online.
"Nominees can also claim pension money," says Jain of Share Samadhan.
The money lying unclaimed is invested just like it would have been for any active EPF account, which means it is not lying idle and earning interest. But the mandate to transfer all unclaimed and unpaid money from inactive accounts to Senior Citizens' Welfare Fund (SCWF) came in November 2016 although the process has not been finalised yet. As of now, the unclaimed money from these accounts gets transferred to SCWF after 10 years, but it can be claimed back.
How to claim: If your Aadhaar is not linked to the EPF account, you need to fill in the composite claim form available in all PF offices and also on the EPFO website. After it is certified by your employer, submit the form to the PF office. If your EPF account is linked to Aadhaar, the entire process can be done online. Nominees can claim the money by providing proper certifications and proof of ownership.
Insurance Payouts
The unclaimed money lying with insurance companies (both life and non-life) reached around `11,668 crore in March 2016, Minister of State for Finance Santosh Kumar Gangwar stated in a written response to the Lok Sabha. The unclaimed amount in this sector includes death, maturity and indemnity claims, survival benefits and premium refunds which have not been claimed post the due date of claim settlement. Incidentally, the Life Insurance Corporation of India held the biggest chunk of the money, an amount of `5,934 crore as on March 2016, while Birla Sun Life Insurance held around `250 crore.
Much like the EPF, the unclaimed money here is also transferred to SCWF at the end of 10 years from payment due date. However, an insurer will try to contact the policyholder or the nominee before the transfer takes place. "Upon the completion of 10 years from the benefit due date, the money will be transferred to SCWF. But it can be claimed by the beneficiaries till 25 years from the date of transfer to SCWF," says Rochlani of IndiaFirst.
What you should do: The policyholder or the nominee can claim the money by furnishing all policy details.
Bank Accounts and Deposits
Banks had `6,835.40 crore of unclaimed deposits (more than 10 years old) as in December 2015, which rose significantly from `4,998.27 crore in the year-ago period. During the financial year 2014/15, `2,419.48 crore was lying unclaimed as fixed deposit balance, according to the Ministry of Finance.
In March 2014, the RBI declared that unclaimed or unpaid money lying in inactive bank accounts for 10 years or more would be transferred to the Depositor Education and Awareness Fund (DEAF). The money will be utilised to support knowledge and information-sharing with customers and will also serve other purposes as specified by the RBI from time to time.
Account holders can claim the money even after it has been transferred to DEAF. In such a case, the bank pays the money to the applicant, which is then refunded by DEAF. Total amount payable will include the unclaimed amount plus the accumulated interest paid by that specific bank.
"No charges are levied on dormant accounts anymore," says Surinder Chawla, Head of Liabilities, RBL Bank. Instead, interest will be paid as per savings account rate of the bank.
How to claim: Depositors, nominees or legal heirs can claim the money by getting in touch with the bank or activate the process on its website. To make a claim, they will have to provide details such as KYC. If the claim is verified, the depositor or the nominee will have to visit the nearest branch of the bank and get the claim settlement.
Capital Market Gains
Capital market returns is another key area where unclaimed money is piling up. As per the current regulations, dividends declared by companies/mutual funds must be claimed by investors within 30 days of the notification failing which the entire amount will be transferred to a new 'unpaid dividend account' within the next seven days. Investors can claim that amount from this new account during the next seven years. After that, the money is transferred to the Investor Education and Protection Fund or IEPF (a penalty is also charged if the unclaimed amount is not transferred to the IEPF). Similarly, an investor's share earnings, matured debentures, matured deposits, refundable application money and interest will be transferred to IEPF if not claimed within the stipulated time frame.
According to the Ministry of Corporate Affairs, `856.84 crore in unclaimed dividends, deposits and debentures had been transferred to IEPF between 2013 and 2016. Total transfer to IEPF between 2001/02 and 2016/17 stood at `1,673.21 crore.
"For the benefit of investors, the unclaimed money is invested in short-term products and liquid funds," says Suresh Soni, Chief Executive at DHFL Pramerica Asset Managers. The interest earned in this phase is also handed over to the investor along with the original unclaimed money. The interest is paid directly to the investor for up to three years after which it is passed on to IEPF.
The unclaimed money is invested in low-risk assets such as liquid mutual funds or fixed deposits of scheduled banks or similar market-linked instruments. "This step has been taken to ensure that investors' money does not decrease in value and grows over the years," explains Soni. "Given the nature of the underlying investment instruments, we do not see any reason for incurring a loss here."
What you need to do: Visit the fund house/company's website to find out if you have any unclaimed fund lying there as these details are now regularly uploaded. To claim the money, one must submit a duly filled claim form, and required documents to the company along with updated bank details and the money will be paid after due verification.
The practice has been embraced by many and by March 10, 2016, 263 claimants have applied to 114 companies for refunds, according to the Ministry of Corporate Affairs.
Capital market regulator Securities and Exchange Board of India (Sebi) has come up with a dedicated Investor Complaints Cell and the SEBI Complaints Redress System or SCORES, which will also help you register your complaints. Other websites, managed by both government and private organisations, include Investorhelpline.in, iepf.gov.in and watchoutinvestors.com that deal with investor-related issues. Amfiindia.com, a website run by the Association of Mutual Funds in India, helps investors know more about mutual funds and other investment instruments.
Small Savings Plans
A large stash of unclaimed money is also lying in the post office schemes mostly due to non-withdrawal after maturity. Efforts are now on to make people aware of their unclaimed savings, claims the Ministry of Communications and Information Technology. According to the ministry, in 2014/15, about `5,999.41 crore invested in the Five-year National Savings Certificates or NSC, `84,363.52 crore invested in Indira Vikas Patra and about `3,000 crore in PPF accounts were lying unclaimed.
The unclaimed money is transferred to SCWF, which is then utilised for the welfare of senior citizens. "Measures have been taken so that the unutilised fund can be used to benefit the citizens," says Singh of Birla Sun Life Insurance.
Get your money back: As financial institutions regularly put up information about unclaimed money on their websites, one should check it out. The claimant must have a passbook or a proper certificate for staking a claim, and must visit the office where the account was initially opened. After paperwork and verification, the amount is refunded.