550859 SIP myths you must know!

In the 2021-22 Union Budget, Finance Minister Nirmala Sitharaman allotted Rs 74,000 crore for MGNREGA, popularly known the 100-day job guarantee scheme. Significantly, according to unofficial sources the entire fund for the flagship scheme can be met by the wealth of investors/depositors lying idle in the banks, MFs, LIC in unclaimed accounts. Even after meeting the entire allocation, a huge Rs 8,000 crore would be left to spare. If it attracts 6% interest rate annually, almost Rs 4,900 crore worth of interest is lying idle.

Rs 26,500 crore in PF

Perhaps, the highest amount is lying idle in provident funds. According to PF rules, an account becomes dormant if the amount is not withdrawn within three years of the last contribution.

If an account becomes dormant and exists in that state for 7 years then the whole amount goes into senior citizen welfare fund. It was estimated approximately Rs 26,500 crore is lying idle in PF accounts, which is the highest among all the segments where money is lying idle.

Rs 18,000 crore in banks

According to RBI data, Rs 18,381 crore is lying idle in different bank accounts till March 31, 2019. According to rules investors’ money goes to investor education fund if the money lying idle or unclaimed for more than 10 years after an account turns into a dormant or inoperative.

Approximately Rs 5 crore is lying idle in dormant savings accounts, which goes to education fund. Besides Rs 4,820 crore is idling in matured fixed deposits which is unclaimed till date, according to RBI data.

Rs 15,000 crore in life insurance

The enormous unclaimed sum lying with life insurance companies is huge. The maturity proceeds of a large number of policies are crores of policies lying unclaimed with all insurance companies.

According to the latest available data, a total of Rs 15,167 crore is lying idle, of which Life Insurance Corporation (LIC) alone has more than Rs 7,000 crore as unclaimed. According to rules, if an amount is not claimed within 10 years of the maturity, then the whole amount generally goes to senior citizen’s welfare fund.

MFs have Rs 18,000 crore

According to the association of mutual fund the total unclaimed dividend stands about Rs 1,200 crore. But unlike FD, insurance or any other investment instruments MFs have perpetual options or open-ended options. Therefore, technically this money never became inoperative or dormant.

But the folios which never witnessed any transaction in the last 10-15 years after maturity come under inactive folios.

Unclaimed dividend

Besides MFs, unclaimed dividends from stocks is also growing in leaps and bounds. According to a report, by March 2021 at least Rs 4,100 crore was lying idle in different accounts as unclaimed stocks divided.

According to SEBI rules, dividend unclaimed for 7 years goes to investor education fund. Bonafide legal heirs of the investor can claim it subject to submission of all the legal documents.

In the past three years, the authorities have settled more than 18,000 cases of unclaimed dividend.

How can you claim?

According to RBI regulations, every bank is required to show the details of unclaimed accounts on the bank’s website. After checking the details on the website, you can visit the branch of the bank with a duly filled claim form, receipts of the deposits and KYC documents to claim the money.

If the claim is related to an old account, you could face difficulties. Therefore, it is a good idea to visit your home branch.

If you are the legal heir or nominee, you need to approach the bank with the deposit receipts, identity proof and a copy of the death certificate of the account holder. After verifying the genuineness of the claim, the bank will release the payment.

Experts advise that the process is a complex one. Therefore, one should add the name of a nominee everywhere and keep the close family member posted about the finances. Beside one can write a will too, if he/she wants.