If a company declares a dividend and the customer does not claim it what happens? Well it gets transferred to the Central Government.
What happens in case of a mutual fund where the investor has died and the family does not know about it. Well, er, the fund keeps it. Well technically I may be wrong…
Let us say a 70 year old lady asks for a redemption of her units. Then she goes off on a tour….and the courier goes back saying ‘addressee not found’.
The fund house knows where she is, but is under no LEGAL OBLIGATION to send it again. So they make some half hearted attempt at sending it again. Then again nothing happens. The lady has forgotten about it. (Well she has money from other sources, so she did not bother much, let us say).
The lady may be receiving dividends from another folio, but the fund house is under no obligation to send it to her….so it stays with the fund house…
Let us say she realises her mistake after 15 months. And she writes to them – she will get the money. At the NAV which prevailed 15 months ago.
Does she get today’s NAV? You ought to be joking.
Does she get INTEREST for that period? Well one very very arrogant fund house told me ‘It is her fault’. Well, well it is.
Did they make an attempt to trace her. Half hearted would be a very sweet word.
Did they use the money during this period? You bet they did.
Does SEBI have a view on this? Not sure.
If I were SEBI I would do the following:
1. Stop the fund industry from using words like ‘Monthly Income Plan’ – which is just some smoke and mirrors game of making it look like a Monthly Income Scheme of the Post office.
2. Increase the net worth requirement to be in the mutual fund business and charge Rs. 50 million from each fund house and put it in the investor education fund.
3. Force all fund houses to ensure that they have the bank account numbers, PAN numbers, and current address of all the investors. If they cannot get these details, these folios should be marked as ‘customer not in existence’ and after 3 years transferred to SEBI’s investor education fund.
Well if I were RBI, I would do the same thing with banks….I have heard of one bank which has (hold your breath) about 200k million rupees lying in its balance sheet…..Just think how profitable RBI would be!!
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