How to claim unclaimed deposits and investments? A step by step guide

Did you know that a whopping total of 42,272 crore are sitting with banks as unclaimed deposits as of the end of March 2023, and around 2,637.94 crore of unclaimed dividends and units are lying with mutual fund (MF) houses? The shares, dividends, and debentures that have remained unclaimed for seven years or more get transferred to the Investor Education and Protection Fund (IEPF), a repository set up under the Companies Act of 1956.

Deposits and interest left unclaimed for over 10 years in inactive bank accounts are transferred to the RBI Depositor Education Awareness Fund (DEA Fund). In this article, we will see the main causes behind this staggering number and how individuals like you and me can navigate this maze and claim our unclaimed deposits and investments.

Reasons behind this mammoth figure There are various reasons behind this huge number of unclaimed deposits/investments. In the case of bank deposits, it is mainly because depositors don't close the savings/current accounts that they don't operate anymore or don't make redemption claims for matured fixed deposits.

In addition, nominees/ legal heirs do not come forward to make a claim. Vikash Jain, Co Founder at , believes that Indian families' not sharing their financial details with family members is one of the main reasons. “The first reason is investors often hesitate to share complete investment details with their families and in the case of emergencies, family members struggle to identify and retrieve investments.

The second reason is people change their addresses without informing the relevant investment companies which leads to difficulties in communication and access to investments. The third reason is an alteration of maiden name after marriage, and the fourth reason is the loss of investment papers during natural disasters like floods or fires," said Vikash.

Checking unclaimed deposits, investments, or insurance Depending on the type of investment, there are different ways to check unclaimed deposits and investments. “Unclaimed deposits with banks can be identified by going to the UDGAM launched by the RBI and filling necessary details of the accountholder.

Similarly unclaimed shares and dividends can be searched for by going to the Investor Education and Protection Fund Authority’s (IEPF) website and putting in relevant details of the shareholder. However, there is no centralised portal or database whereby unclaimed insurance policy proceeds can be accessed.

One has to go through individual websites of the insurance companies and check for unclaimed maturity proceeds," said Ankit Garg, Advocate and Founder of Required documents to make claims Investors or their legal heirs must have the respective folio number, policy number, name and address of the investor/deceased to try looking for details of unclaimed deposits/investments.

“In most cases, the name, PAN Card and respective document of the unclaimed asset are needed to claim unclaimed assets," said Vijai Mantri, Co founder of Steps that need to be taken Vijai said that the process of claiming might differ across assets, but the core idea is to establish the authenticity of the claimant by furnishing KYC.

It is also seen that children of deceased individuals have a hard time figuring out their parents’ investment details. “The first thing that a person should do is to check the files and records at home. As Indians, we have the tendency to store important documents at home. And even if you think that a particular piece of paper is useless, you will be surprised to know that even an insignificant document can turn out to be very beneficial," said Vikash.

He also mentions that financial advisors and chartered accountants might have information about investments while assisting them/parents with tax filings. The third step is examining bank statements for clues, such as premium payments or online transactions related to investments. If nothing is available, then the last approach that people might take is to visit the bank branch where they believe that their parents had bank accounts.

“There might be a scenario where you believe that your parents had bank accounts among these four five banks. You can walk up to them and say that you are a legal claimant and ask for any existing accounts of your parents with them," said Vikash. After you have a fair idea about your parents' investment details, you must write to the companies seeking detailed procedures.

“The legal heirs have to submit their KYC documents, death certificate of the deceased investor, and relationship proofs with the deceased such as Legal Heir Certificate, Family Tree, and Surviving Member Certificate. In case of high value shares or deposits, the concerned body may also ask the legal heirs to approach the court to obtain Succession Certificate or Probate in case the deceased left a Will.

The process is simple in case there is a Nominee in the assets. In such a case, the nominee can get the investments faster by providing basic documents. However, it is important to note that the nominee is only a custodian of the investments. Legal heirs can stake claim on the said investments at any time, and their rights are protected under the law," said Ankit.

On top of that, the requirement for different legal documents will depend on the amount that you are seeking to claim. “You have to provide the succession certificate beyond a certain claim amount. In case of physical shares, the limit was initially 2,00,000, but SEBI increased it to 5,00,000. However, if we're dealing with shares in demat form, that limit is 15 lakhs.

Now, when it comes to banks, mutual funds and insurance policies, the threshold remains at 2 lakhs," said Vikash. Fees When carrying out the process, one might wonder about the fees involved in claiming the unclaimed deposits and investments. "Government does not charge any fees in lieu of returning these assets.

The owner of the unclaimed asset pays only for the hand holding services delivered by any individual/company, but services are voluntarily sought by the asset owner himself/herself," said Vijai. However, one might have to pay money to obtain certain legal documents. "Some legal documents like affidavits/indemnity bonds, etc., need to be submitted.

You might have to hire a lawyer. Also, in the case of deceased investors, legal heirs rights have to be proved, which may require court orders such as Succession Certificate/Letter of Administration or Probates, etc., which will involve substantial costs," said Ankit. Deadline for claiming assets Presently, no regulator or public authority has issued any circular or formal notification regarding confiscating these assets, except for certain rules pertaining to unclaimed deposits.

"At present, shares can be claimed at any time without a time limit. However, for other investments like insurance, PF, bank accounts, and postal savings, the government has implemented a timeline. After 10 years of being unclaimed, the funds are transferred to a separate fund. Then, the government waits an additional 15 years.

After a total of 10 + 15 years, generally, for all financial instruments, the funds become inaccessible, and the government utilises them for the senior citizen welfare fund i.e. PF, EPF and insurance and DEA (in case of bank account)," said Vikash. “If someone doesn’t claim back their unclaimed assets, they continue to be in the custody of the requisite Government body like the IEPF Authority, SCWF, RBI etc.

Until the government creates any new law, the said unclaimed investments can be claimed back by the concerned investor," said Ankit. Claim process for NRIs People who have moved abroad can also claim back their unclaimed deposits/investments in India by following the due procedure. “In case the investors are residing abroad, they have to send their KYC documents, OCI/PIO card, foreign address proof, old Indian address proofs, etc., to prove their credentials to the concerned companies/authorities," said Ankit.

"For Non Resident Indians (NRIs) living abroad, all the important papers, like KYC details, passport, PAN, and address proofs, need to be notarised or apostilled from their country of residence. Now, NRIs have two options for this paperwork adventure. They can either go to the Indian embassy to get things sorted there, or they can take the local route and get documents notarised by a nearby notary.

Moreover, NRIs need a PAN card and they need to open an NRE or NRO bank account and a corresponding Demat account in India," said Vikash. Taxation No taxes are involved when claiming back one's own investments or those of a deceased individual. The only instance where taxation comes into play is when the reclaimed shares are sold, and capital gains tax becomes applicable.

The specific tax implications are determined based on whether the gains are categorised as long term or short term, as per the income tax rules. Livemint tops charts as the fastest growing news website in the world to know more. Unlock a world of Benefits! From insightful newsletters to real time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away!.