Unclaimed Investments with Banks, Insurers, PF Organisations and Mutual Funds

When mutual fund distributor Bajaj Capital found that a certain investor had not made any new investments in mutual funds for a long time, it decided to check up on him. To their surprise, the officials found that the investor had died a few years ago and his wife had no knowledge about the Rs 2 lakh he had invested in HDFC Mutual Fund.

"The amount had grown to Rs 9-10 lakh. The lady broke down because she was facing financial difficulties and the money would help her tide over the problems," says Surajit Misra, executive vice-president and national head of mutual funds, Bajaj Capital.

Similarly Ajay Kumar Parmar had forgotten all about the Saradar Sarovar Narmada Nigam bonds he had bought 20 years ago when he was living in Ranchi. It was only when he heard about another investor getting a good price for his bonds this year that he recalled his own investment.

Not everyone is as lucky though. An estimated Rs 22,000 crore of investors' wealth is lying unclaimed with insurance companies, mutual funds, corporate houses, banks and the Employees' Provident Fund Organisations.

These are investments that were made but never claimed by the owners after maturity. "The investors who put small amounts in a number of instruments often face this problem because the portfolio becomes too unwieldy and difficult to monitor," says Sandeep Shanbhag, director at Wonderland Consultants Tax & Investment Advisory.

ET Wealth looked at the unclaimed wealth lying across various investment options during Sept-Oct,2012. Insurance policies and long-term instruments topped the list of most forgotten investments.It's a problem that afflicts almost every investor. Every household will have a dormant bank account, or a long-forgotten insurance policy or expired dividend cheques and 

Claim it Now

Life insurance policies

This is a major black hole when it comes to investor wealth. The life insurance industry has roughly Rs 1,724 crore unclaimed funds lying with it.Private sector insurance companies, which started operations only 11 years ago, alone have more than Rs 1,500 crore worth of unclaimed benefits.These include policy benefits paid out, but not encashed by, policyholders, maturity benefits lying unclaimed or death claims not filed by nominees. LIC, which has been doing business for the past six decades, stands at third place with Rs 218 crore.The public-sector behemoth has some 1.8 lakh policies for which the maturity benefits have not been claimed. Besides, there are cases where the policyholders have died but the death benefit has not been claimed.

Companies say they hold the unclaimed funds for a long time. V Srinivasan, chief financial officer at Bharti AXA Life Insurance, says, "Irda regulations don't allow insurers to write off this money for a long time. Currently, long has not been defined." However, you won't get more than the due amount because it won't earn any interest. "We don't pay any interest because it would incentivise forgetfulness by investors," says Srinivasan.

It's best to file death claims as soon as possible. In case the policyholder dies, a delayed claim raises suspicion of foul play or fraud. The insurance company will then have to investigate the cause and circumstances of death. "It becomes a sticky issue. It's in everybody's interest to make the claim on time," adds Srinivasan.

To ensure that your investment in insurance is safe, be sure to inform your family members about all the policies and keep a record. The nominee will be able to claim the amount without any hassles. However, problems crop up when no nominee is listed in the insurance document or if he has not been informed.Banks have about Rs 2,481 crore as unclaimed deposits and the government has proposed to credit unclaimed funds of more than 10 years to a new fund."Reserve Bank of India.

(RBI) has informed that as of December 31, 2011, total amount of around Rs 2,481.40 crore in 1,12,49,844 accounts is lying as unclaimed deposits with the commercial banks," Minister of state for finance" Namo Narain Meena had informed the Rajya Sabha in a written reply. Now RBI has made it mandatory for the Banks in India to put in information on inoperative or inactive accounts on their websites.

As the RBI and the Finance Ministry have tightened their noose around the Banks in India - why such steps are not taken to return the hard earned money of the tax payers and citizens of India by insurance companies, mutual funds, corporate houses, banks and the Employees' Provident Fund Organisations on Similar Lines as in case of Banks.

Source : ET Wealth and Personal Views of the Author in 2012