Sebi plans to streamline asset claims

The markets regulator has proposed detailed guidelines to manage unclaimed assets and improve the return processes for investors to prevent misuse

- Jash Kriplani

For evidence of the financial immaturity of investors in India, you don't need to dig beyond the following data point. Indian investors had ₹323 crore in unclaimed funds and ₹182 crore in unclaimed securities as of 31 January, according to Securities and Exchange Board of India.

The markets regulator has now proposed guidelines to ensure that such unclaimed assets are not misused and returned to investors at the earliest. In a consultation paper, Sebi has outlined a process involving brokers and stock exchanges.

Here is how this will work.

Defining 'unclaimed'

If unutilized funds or securities cannot be credited back from a client's broking account to their bank or demat account in the normal course of business, or the client is not reachable, the broking account shall immediately be put under 'enquiry status', and the funds in it be termed as 'unclaimed'.

Brokers are required to return idle sums from a client's broking account to their bank account periodically. If a broking account is inactive for 30 consecutive days, funds to be credited back as per monthly settlement cycle—the first Friday of every month. For active accounts, unutilized funds need to be credited from a client's broking account to a bank account on the first Friday of every month or quarter, as per the client's preference.

Shares are required to be transferred to a client's demat account a day after the client punches the buy order—on a T+1 basis. If the broker is unable to transfer securities to a client's demat account, the broking account will be under 'enquiry status', and securities will be termed as 'unclaimed'. Transfer failures can happen if a client's bank account (for receiving funds) or demat account (receiving shares) turned inactive or the account details are incorrect.