Investments are an essential part of an individual’s life. They form an integral part of your and your family’s financial security. Investments such as pension funds and life insurance create savings by adding a certain fixed sum of money from your income for a fixed period until its maturity. However, what happens quite often is that many people who pass away untimely or suddenly, have families who have no information about their investments or savings. This collected money remains unclaimed and is added to the rest of the unclaimed investments.
From old provident funds, garnered from previous jobs to share application money and insurance payouts, all the money piles up with no one to claim it primarily because they are oblivious of its existence. Thus, there are crores of rupees in unclaimed money in the government treasury. Here are some fundamental discoveries made regarding the unclaimed money:
- About 1,56,539 crore is lying with various financial institutions as unclaimed money which has small savings plans, Employees’ Provident Fund Organisation (EPFO) and banks leading the list.
- Of the total unclaimed deposits, the country’s largest bank, State Bank of India (SBI), had the largest share of Rs2,156.33 crore in 2018.
- Also, as per Finance Minister Nirmala Sitharaman’s reply to a Lok Sabha question, unclaimed deposits in commercial banks alone have increased to Rs14,578 crore in 2018, up from Rs11,494 crore a year earlier. This is a massive 26.8% increase. The sum was Rs 8,928 crore in 2016.
What happens when the investment money remains unclaimed?
The unclaimed money in the government banks is pooled under the Depositor Education and Protection Fund (DEAF) by the Reserve Bank of India (RBI). It is used for investor protection activities. The government of India has specifically asked the banks to transfer the cumulative balances in all accounts with interest accrued and not operated for ten years to move to the DEAF.
Such a situation usually arises when individuals having a pool of investments in government or private financial institutions die without a will or without informing their families. Their families have no idea whatsoever about the accounts that they may have maintained in various banks. Also, sometimes, due to having made multiple investments and over a long period, individuals tend to forget about them. The financial institutions having these investments might have failed to locate them for payment as contact details change over the years.
How can the unclaimed money be claimed?
The government has, however, been taking necessary steps to transfer it to legal owners or use it for the benefit of the society. The RBI has made it compulsory for all the banks and financial institutions to publish the details of all the inactive or inoperative accounts for ten years or more. To track if you have any unclaimed amount, you can run a search on relevant websites and check the results.
Recovering Provident Fund, Pension Money – The government of India stated that there was about 43,000 crore lying inoperative in the Employees’ Provident Fund. The biggest reason for this unclaimed money is that many accounts have been discontinued a long time back, but their deposits are still earning interests. Also, if there is any unclaimed pension money, it is transferred to EPFO accounts that ultimately adds to the cash pile-up. To address the situation of mounting unclaimed funds and facilitate their transfer, people are insisted on sharing their Aadhaar number which after linking to their universal account numbers or UANs requires no other proof of identity. Claims, transfers, and submissions can now be done online.
Insurance payouts – The unclaimed amount in the insurance sector include death, survival benefits, maturity and indemnity claims and premium refunds that have passed their due date of claim settlement. The Insurance Regulatory and Development Authority of India (IRDAI), in Hyderabad pools the unclaimed deposits lying with the insurance companies. The policyholder or the nominee holder will have to furnish their policy details to claim the insurance payout.
Unclaimed amount in bank deposits – As mentioned earlier, banks transfer all unclaimed or unpaid money lying inactive with over ten years to the DEAF. However, account holders can claim the funds even after they are lying with the DEAF. Usually, the bank pays the applicant and then seeks a refund from the DEAF. Accounts holders, nominees or legal heirs will have to get in touch with the bank and furnish their KYC details for verification. Once verified, they can visit the nearest branch and claim their money quickly.
Capital Market gains – According to regulations, investors should claim the dividends declared by organizations or mutual funds within 30 days. After that, it gets transferred to ‘unpaid dividend account and later to Investor Education and Protection Fund or IEPF. This includes share earnings, matured debentures, matured deposits, refundable application money and interest. To claim their capital earnings and interest, investors have to submit a duly filled claim form, with required documents to the company along with updated bank details. Once verified, the investor will receive the money.
Avoid the hassle and keep track of your investments
Instead of going through the hassle, the best practice is to keep track of your investments. Also, ensure your family is aware of them. Investment Safeguard has been designed to facilitate you in keeping your investment details at the palm of your hand. It is an application that makes sure not just you but your family as well can access all your investments, especially when you are not present in their midst. It is reliable, safe and instrumental in keeping you updated with timely reminders according to your convenience. Thus, don’t let your investment money add to the piling amount of unclaimed cash. Keep it secure and at your fingertips!