Additional investment opportunities to Mutual Fund for unclaimed Redemption and Dividend amounts

SEBI wide its circular SEBI/HO/IMD/DF2/CIR/P/2016/17 dated 25^th February 2016 allowed certain additional investment opportunities to Mutual Fund for unclaimed redemption and dividend amounts which is effective from 1^st April 2016. The unclaimed redemption and dividend amounts are currently allowed to be deployed only in call money market or money market instruments. Now it is also allowed to be invested in following with certain conditions:-

• Separate plan of liquid scheme /money market mutual fund scheme floated by mutual funds specifically for deployment of the unclaimed amounts
•  AMCs shall not be permitted to charge any exit load in this plan
• Total Expense Ratio (TER) of such plan shall be capped at 50 bps

Further Mutual funds has to take following actions to ensure a pro-active role in tracing the rightful owner of the unclaimed amounts:

• Provide list of names and addresses of investors in whose folios there are unclaimed amounts on its website
• AMFI to provide the consolidated list of such investors across Mutual Fund industry on its website
• Investor can obtain information about such unclaimed money only after providing proper credentials and adequate security control measure by Mutual fund
• Mutual fund and AMFI shall disclose process of claiming unclaimed amount and necessary forms etc on their websites.
• Information on unclaimed amount along with its prevailing value (based on income earned on deployment of such unclaimed amount), shall be separately disclosed to investors through periodic statement of accounts/ consolidated account statement sent to investor
• Investor claiming the unclaimed amount during 3 years from its due date shall be paid such amount alongwith income earned on its deployment
• Investor claiming the unclaimed amount after 3 years from its due date shall be paid such amount along with income earned on its deployment till the end of the third year. After the third year the income earned on such unclaimed amounts shall be used for the purpose of investor education.