On the trail of lost money

Call it a ‘black hole’ of investor wealth.  There are no takers for crores of money, literally! A wide spectrum of financial instruments such as shares, mutual funds, bank accounts, insurances, provident funds and post office deposits carries the ‘black hole’ of unclaimed money that nobody claims year after year. No wonder, a treasure trove that may well run into thousands of crores is silently lying idle to be taken back by rightful owners.

The ‘problem of plenty’ (read unclaimed investment) has been most acute in country’s capital markets, precisely in stock and mutual funds. Money is blocked in physical shares as well as in unredeemed mutual funds. Unofficial data suggests that 21 billion shares in about 4,000 companies, amounting to Rs 2.3 lakh crore, are currently held in physical form. “This essentially means lakhs, may be even crores, of investors may have simply forgotten the stocks or mutual funds they had bought long ago or do not know about the shares or mutual funds they have inherited. As many lose tracks, investors also may not have any inkling of corporate benefits such as dividends, bonuses, split shares etc paid on their investments”, says Abhay Chandalia (Jain), co-founder of Share Samadhan, a Delhi-based company dealing with unclaimed investments by providing customised services to investors to get their money back.

“This essentially means lakhs, may be even crores, of investors may have simply forgotten the stocks or mutual funds they had bought long ago or do not know about the shares or mutual funds they have inherited. As many lose tracks, investors also may not have any inkling of corporate benefits such as dividends, bonuses, split shares etc paid on their investments”, says Abhay Chandalia (Jain), co-founder of Share Samadhan, a Delhi-based company dealing with unclaimed investments by providing customised services to investors to get their money back.

Surely, many gold mines are waiting to be discovered! Take the example of Pushpa Rashmi Mansharamani who was presently surprised to know that her holding of 7680 ITC shares, bought 25 years back with a few thousand rupees, has multiplied to several lakhs with unclaimed dividends, bonuses, split shares piling up. Being a passive investor, Pushpa was completely oblivious of the treasure trove lying in her own backyards!

“Pushpa is no exception. In fact, her instance is just a tip of the iceberg”, says Vikash Jain, a Chartered Account and co-founder of Share Samadhan, “we come across investors who are sitting on ‘goldmines’ but clueless as to how to unlock the value.

As the investments have been lying for a long time and certificates are in physical form having no updation of official records, investors encounter numerous problems while transferring, transmitting or dematerializing shares and mutual funds. It needs experts’ service for an investor to get back the money which they deserve so rightly.”

Look beyond the capital markets, the amount is no less mind-boggling. A whopping Rs 60,000 crore is lying in equally crucial instruments of dormant bank accounts, inoperative provident funds, post office savings schemes and matured insurance policies, involving crores of investors. “This is such an issue that afflicts every household without noticeable hullabaloo. We prefer to ignore it despite the chronic presence in our daily life”, says Abhay Jain, a Chartered Accountant by profession.

“This is such an issue that afflicts every household without noticeable hullabaloo. We prefer to ignore it despite the chronic presence in our daily life”, says Abhay Jain, a Chartered Accountant by profession.

Take the instance of provident funds. The official figure of unclaimed PF is pegged at Rs 27,000 crore. “An unclaimed amount of Rs. 27,000 crore is lying with the Employees Provident Fund Organisation as the identity of the subscribers could not be established”, says the Union Labour Minister Bandaru Dattareya in a recent function at ASSOCHAM. Many provident funds account holders neither withdraw nor transfer their PF accounts with a change of job, leading to piling up of unclaimed investments.

Insurance sector, both life and general insurance companies, is also grappling with unclaimed investments of Rs 6664 crore which were not encashed by policyholders or their nominees. Let’s elaborate: Say your parents availed a life insurance but never shared that with the family. In case of death, there is a possibility that it remains unnoticed and unclaimed forever.

LIC alone has some 1.8 lakh policies for which the maturity benefits have not been claimed. More than Rs 5,125 crore is languishing in dormant accounts and unclaimed bank deposits across India. Most of the bank accounts are savings accounts and in rural areas. An RBI data shows that more than 1.33 accounts of all type are in an inoperable status.

Popular mass-schemes of Indira Vikas Patra, National Savings Certificates besides the regular savings pools are the main sources of unclaimed investments in post offices. The Minister of Communications and Information Technology, Ravi Shankar Prasad elaborates: “Rs 1,000.61 crore has been lying unclaimed in post office savings bank, which includes Rs 894.59 crore for Indira Vikas Patra, Rs 60.02 crore for 5 years National Savings certificate, Rs 24.20 crore for fixed deposit. The main reason for the unclaimed amount is non-withdrawal of money by depositors after maturity of their investment in small savings schemes discontinued long back.”

A crucial issue is that the wealth in the ‘black hole’ is mounting despite the government taking notice of the ‘problem of plenty’ in recent times. In fact, it has little option left but to recognize the issue in full scale.