Govt mulls law to forfeit funds in frozen demats

The government is considering bringing in legislation to forfeit the Rs 8,804 crore in frozen demat accounts, Finance Minister Pranab Mukherjee said today.

Replying to supplementaries during the Question Hour in Rajya Sabha, he said the demat accounts of those investors who did not comply with the mandatory PAN requirement by December 31, 2006, were frozen with effect from January 1, 2007.

"Efforts have been made to inform the beneficial owners to provide PAN and activate the frozen accounts," he said.

As per data furnished by the two depositories, the total number of frozen accounts has come down from a little over 43.5 lakh accounts on January 1, 2007, to about 6.56 lakh accounts on January 31, 2009, as some investors furnished PAN details.

Correspondingly, the assets in the frozen accounts have come down in value from about Rs 6,38,318 crore to Rs 8,804 crore.
     
"There is a proposal to declare the frozen accounts with the depositories as unclaimed, so as to consider forfeiture of the unclaimed securities," he said.
     
Forfeiture of amount in frozen accounts "has to be done through due process of law," Mukherjee said adding a legislation will be brought in the Parliament soon.
     
The new law may be in the form of an amendment to the Depositories Act, he said adding a part of the forfeited money would be used for investor education.