Over a billion unclaimed shares in IEPF, shows Lok Sabha data

Less than 2% of such shares with IEPF make their way back to investors, shows data before Lok Sabha

The number of unclaimed shares in government custody has crossed over a billion, with new additions every year. 

Total number of unclaimed shares lying with the government’s Investor Education and Protection Fund (IEPF) Authority has reached 1.15 billion, according to data shared in the Lok Sabha. It has more than doubled since 2017-18.
 

The government began to transfer shares that it deemed unclaimed to the IEPF Authority in October 2017. The definition of an unclaimed share was one on which the investor did not encash or otherwise claim a declared dividend for seven years.

For example, if an investor receives a dividend check of Rs 10 and does not take the trouble to encash it because of the small amount, the government declares ‘unclaimed’ the shares on which the dividends were received. It then transfers such shares from the investor’s account to the IEPF Authority’s unclaimed shares account.
 

Only a small portion of the transferred shares make their way back to investors. Total transfers for each year are equivalent to less than 1 per cent of the number of unclaimed shares.
 

There was also data shared on the “total balance amount in the Investor Education and Protection Fund Authority in the form of unclaimed dividend, unclaimed interest on bonds, among other unclaimed investments” in the December 12 response. It pegged the amount at Rs 5,539.25 crore as of October 2022. It was unclear if this covered only the value of dividends and other pay-outs, or it also included the value of shares.



A look at the unclaimed shares transferred to the IEPF in large listed companies shows that it likely excluded the value of shares. For example, the IEPF holds around 0.5 per cent stake in Reliance Industries which alone is worth close to Rs 10,000 crore, shows stock exchange data. 
 

The value of unclaimed dividends and other pay-outs has also more than doubled from 2017-18. The stock market regulator, the Securities and Exchange Board of India (Sebi), carried out a study to assess the value of unclaimed shares based on data as of March 2020. A pandemic stock market crash wiped out a large portion of the market value around the same time. It found that total value of unclaimed shares at the time was Rs 17,326 crore.


 

The S&P BSE Sensex has doubled since then. Its movements are seen to be generally representative of how the market is moving. The value of unclaimed shares is likely to have also increased. New shares are added periodically as disclosed in the Lok Sabha answer.
 

The IEPF said that it has taken steps to return money including simplified forms, online submission, and a “standard document list and Standard Operating Procedure for processing of claims, including those involving transmission and loss of share certificates have been prescribed through Schedules in the Rules”.
 

Total number of shares returned to shareholders was 0.02 billion since 2017-18. This is equal to 1.9 per cent of the number of unclaimed shares as of October 31, 2022.