This includes ₹3.78 lakh crore in physical shares, ₹35,770 crore in mutual funds, ₹5,454 crore in unclaimed dividends, ₹28,800 crore in Investor Education and Protection Fund (IEPF) holdings, ₹62,225 crore in bank deposits, ₹48,000 crore in unclaimed provident funds, and ₹21,539 crore in unclaimed insurance policies from LIC.
This silent erosion of wealth is not just a loss to individual investors but also a significant hit to the economy.
Understanding how these investments become unclaimed is crucial to reclaiming this lost wealth.
Why investments become unclaimed
A combination of factors leads to the unclaimed status of investments.
Abhay Chandalia, Managing Director of Share Samadhan, a Delhi based firm that has been helping people recover their unclaimed investments, highlights that changes in personal situations are often the primary cause.
For example, when investors relocate without updating their address with financial institutions, they miss out on crucial information.
“This break in communication eventually leads to investments becoming unclaimed,” Chandalia explains.
Similarly, when an investor dies without disclosing their investments to heirs, these assets often remain unclaimed. This is especially common when someone passes away without a will or detailed records of their investments.
Another significant factor is the lack of awareness.
Many investors are unaware of the investments made by family members or the procedures to claim them.
Chandalia notes that this issue is compounded by administrative inefficiencies such as data entry errors or miscommunication between financial institutions and investors.
The cumbersome process of recovery
Recovering unclaimed investments is a notoriously difficult process.
The lack of a centralised system for tracking investments makes it challenging for shareholders to keep tabs on their assets, especially when they have investments across various financial institutions.
Chandalia observes, “Without a system, it becomes easy for an investment to be overlooked and eventually become unclaimed.”
The documentation process involved in recovery is another significant hurdle. Proving identity, ownership, and legal heirship is time-consuming and complicated.
Solutions
Chandalia emphasises that preventing investments from becoming unclaimed in the first place is key.
“Investors must update their contact information with all financial institutions and inform potential beneficiaries about their investments,” he advises.
Technology plays a crucial role in simplifying the recovery process, according to Chaman Chandalia, Strategy Head, Share Samadhan.
He advocates for digital records, continuous online tracking systems, and similar mechanisms to help investors and beneficiaries stay informed about their assets.
“These tools can prevent investments from becoming unclaimed and make the recovery process much easier,” he explains.
Financial institutions, regulators, and companies like Share Samadhan play a vital role in this process
