Sebi proposes new framework to handle unclaimed funds, securities

The regulator has proposed that if the client is not reachable or the funds cannot be credited to their bank account, such accounts will be put under 'enquiry status'

In a bid to protect investors’ interest, the Securities and Exchange Board of India (Sebi) has proposed a new framework for dealing with unclaimed funds and securities lying with the stock brokers.  

 

As of January 31, the total value of unclaimed funds had touched Rs 323 crore and the value of unclaimed securities Rs 182 crore.

 

There may be instances where the securities transfer could not happen due to incomplete or incorrect information of the demat account or non-traceability of clients of their legal heir and nominees.

 

The regulator has proposed that if the client is not reachable or the funds could not be credited to their bank account, then such accounts will be put under “enquiry status”.

 

The brokers will have to contact the clients through all feasible means and will have to upstream such funds to clearing corporations. If the securities under the “enquiry status” lie with the broker for over 30 days, they will be termed as unclaimed securities.

 

If the funds remain unclaimed for a year, then they will be transferred to the dedicated bank account of the designated stock exchange on a quarterly basis. Funds that remain unclaimed for 3 years with the stock exchange will be transferred to the Investor Protection funds (IPF).

 

The stock exchanges and stock brokers will be providing a search facility on their website for clients, nominees, and legal heirs to enquire about unclaimed funds and securities.

 

Sebi has also specified the process to be followed for handling the funds and securities before they are transferred to the dedicated bank account or to the IPF. It has also proposed the process and timelines for the claim.

 

In December 2024, the market regulator had proposed a new platform called Mutual Fund Investment Tracing and Retrieval Assistant (MITRA) for investors to track inactive mutual fund folios.