Unclaimed money typically refers to funds in bank accounts, Shares in company, Mutual Funds units or Insurance policies or any other financial instrument that have remained inactive or untouched for a long period of time, usually 10 years or more.
The Reasons for Unclaimed Money in Financial Institutions~
1️⃣ Deceased Account Holder: When a person with any kind of account with any financial institution passes away, their family or legal heirs may be unaware about the its existence, leading to the funds remaining unclaimed in financial institutions.
2️⃣Forgotten or dormant account: Many people have multiple accounts and investments, some may simply be forgotten over time. This lead to unclaimed funds in banks or any financial institutions.
3️⃣Relocation: Moving to a new address and failing to update new contact information with the financial institutions which leads to their inactive account status and any potential activity.
4️⃣Unclaimed Matured Deposits: A term deposit like FD can become unclaimed like others if the customer does not claim the proceeds for a longer period of time after it matures.
5️⃣Lack of Awareness: Many people are not aware about that the funds in dormant accounts or old investments.
What are the RBI Guidelines for handling unclaimed deposits~
The RBI has laid out clear procedures for handling and reclaiming the unclaimed deposits.
Dormant Account:
Account with no activity for 12-24 months are marked dormant (inactive account). Banks will notify the account holders via SMS, Emails.
Unclaimed Deposits:
If untouched for 10 years, the money will be transferred to the Depositor Education and Awareness Fund (DEAF) maintained by RBI.
How to reclaim unclaimed funds in Mutual Funds~
SEBI’s MITRA Platform:
To trace unclaimed investments through MITRA, investors need to visit the MF Central website (mfcentral.com). MITRA is a centralised platform that helps locate mutual fund investments by matching investor details using a two-step data verification process.
How to reclaim unclaimed Shares~
Process of Recovery of Share From IEPF:
- Filing to Authority by Claimant (Form IEPF-5).
- Submitting the Claim to the Company.
- Submission of Claim from the Company to the IEPF Authority.
- Refund from IEPF Authority to the Claimant.
How to reclaim unclaimed money in Banks~
- Submit an application to the bank or RBI.
- Provide KYC documents ( Adhar Card, PAN, Passport).
- Upon verification the account is reactivated or funds are returned.