Market reforms: The unfinished agenda

Consistent publication of dispute rulings, standardised document requirements for claims and a name-based search facility could help families trace unclaimed mutual fund investments

Ratan, a friend, was buying his dream home. The seller had brought the registration forward by a day, and his mutual fund redemption money was now due on that very day. He needed it in the morning to get a pay order for the afternoon appointment. His question was simple. At what time would the money reach his bank account? By 8 am, it had. What struck me was that his worry had been about the hour. He had taken the date for granted.

 

Anyone who invested in shares a few decades ago will understand why Ratan’s confidence struck me. Payments could be delayed, and physical share transfers could get stuck for months over signature mismatches. Today, trades settle the next working day and shares arrive directly in your demat account. With the UPI block facility, your money can stay in your bank account earning interest until needed for a purchase. Scams and payment crises prompted many of these changes, often after investors had paid dearly. Each reform meant changing practices that somebody benefited from.

 

The confidence these reforms have helped build is particularly visible in mutual funds. Entry loads, deducted from your money before it was even invested, were abolished in 2009. Direct plans followed in 2013, allowing investors to avoid distributor commissions. Clearer scheme categories made funds easier to understand and compare, while the riskometer showed how risky each scheme is. Investors now put over ₹32,000 crore every month through systematic investment plans (SIPs), with investments held through SIPs worth nearly ₹18 lakh crore. This confidence was built while openly acknowledging the risks. Advertisements repeatedly reminded investors that mutual fund investments are subject to market risk and returns are not guaranteed.

 

The improvements extend to families claiming investments after a death. Your family can now report the death to a single intermediary, and the other intermediaries must contact the nominee with the procedure and documents required. We saw this work smoothly when a deceased client’s family received his mutual funds and shares within 10 days of submitting documents. 

 

But families can still face unreasonable demands where there is no nominee or surviving joint holder. While claiming my late father’s unclaimed shares, I was asked for my mother’s death certificate from 1963. Families need predictable document requirements in every case.

 

An arbitrator on the Securities and Exchange Board of India’s (Sebi’s) Online Dispute Resolution (SMART ODR) platform ruled in my favour on that demand. But why should the next investor have to fight the same battle? Publishing decisions with personal details removed would help investors understand their rights and discourage intermediaries from repeating unreasonable demands. Sebi already requires this publication, but it is not done consistently. And if analysis shows the same complaint recurring, the cause should be fixed rather than each case fought one by one. 

 

Then there is money that families have lost track of. Unclaimed mutual fund dividends and redemption proceeds were ₹3,811 crore as on March 31, 2026. MITRA (Mutual Fund Investment Tracing and Retrieval Assistant) helps trace inactive folios, but only if you have the investment details. How can the children provide those details when they do not even know whether the parent invested in mutual funds? The Investor Education and Protection Fund (IEPF) allows a search for unclaimed shares by name. A similar search across mutual funds would let children start with a parent’s name and discover whether anything is lying unclaimed. The usual worry is fraud. But entitlement is checked before payment, so fraud by a few should not stop families from claiming what is rightfully theirs. 

 

Truth be told, the confidence Ratan has was built one reform at a time. The remaining gaps can be closed the same way, and none needs new technology or a new law. Sebi can ensure that ODR decisions are published, as its own rules already require. It can lay down one complete list of documents for claims, beyond which nothing may be asked. And it can allow a name search for unclaimed mutual fund money, as IEPF already does for shares. Ratan worried only about the hour. Every investor deserves the same confidence.

 

The writer heads Fee-Only Investment Advisors LLP, a Sebi-registered investment adviser; X (formerly Twitter): @harshroongta