IEPFA needs urgent reform

The Investor Education and Protection Fund Authority (IEPFA) was established in 2016 under the ministry of corporate affairs (MCA) as a custodian of investors' funds unclaimed for over seven years.

- SANJEEV SANYAL SRISHTI CHAUHAN

The Investor Education and Protection Fund Authority (IEPFA) was established in 2016 under the ministry of corporate affairs (MCA) as a custodian of investors' funds unclaimed for over seven years. It pools these funds under the Investor Education and Protection Fund (IEPF) and administers refunds of unclaimed shares, dividends, matured corporate deposits/debentures, etc. to the rightful claimant.

The pool has more than tripled since 2016-17, but the speed of resolution remains tardy. Out of 11,450 lakh unclaimed shares lying with the fund, only 50.95 lakh were returned to the investors until October 31, 2022. Consequently, investors' hard-earned money remains stuck with the IEPFA for years despite claimants making every effort to complete the formalities. This article explores the inefficiencies of the process.

To claim a refund, an investor or their heir has to apply online at the MCA portal and submit a copy of the e-application physically along with other documents to the company's nodal officer. Thereafter, the company needs to send the verification report to the authority that, in turn, is supposed to examine it and refund the amount. This is the theory.

In practice, the process is extremely inefficient and requires a complete overhaul. Firstly, the portal is mired in frequent technical issues and the user interface is unfriendly. Companies have to switch to different modes for various signatories like nodal officer, authorised signatory, etc., and each time, several one-time passwords (OTPs) are generated. This makes the navigation complicated and confusing.