In the first part, we looked into how to check your unclaimed deposits and investments, documents and the steps you need to take to make a claim. You can read it here:
In this final instalment on unclaimed investments, we delve deep into the crucial aspects of technology’s role, fee structures, and the pivotal function of recovery advisory platforms.
Fees
When carrying out the process, one might wonder about the fees for claiming unclaimed deposits and investments.
“Government does not charge any fees in lieu of returning these assets. The owner of the unclaimed asset pays only for the hand-holding services delivered by any individual/company, but services are voluntarily sought by the asset owner himself/herself,” said Vijai, Co-founder of Jeevantika Consultancy Services.
However, one might have to pay money to obtain certain legal documents. “Some legal documents like affidavits/indemnity bonds, etc., need to be submitted. You might have to hire a lawyer. Also, in the case of deceased investor, legal heirs rights have to be proved, which may require court orders such as Succession Certificate/Letter of Administration or Probates, etc., which will involve substantial costs,” said Ankit, Advocate and Founder of Garg Law Chambers (GLC).
Role of recovery platforms
It might be challenging for individuals to claim their or their parent’s unclaimed investments. This is where recovery platforms can help people from start to end. They charge a fee based on the amount of assets recovered.
“Many clients approach us intending to reclaim a specific holding, only to discover through our advanced search platform that additional assets are tied to their name or that of their family members. This depth of insight is often unattainable without professional assistance.
Hiring a professional reduces the probability of error and ensures that everything is recovered and that similar steps do not have to be repeated by himself or later by his legal heirs,” said Shreyash, Managing Partner at Recoversy.
Vikash Jain, Co-Founder at Share Samadhan, assesses the situation first and only charges his clients after they receive their claims.
“For nearly 12 years, our investment retrieval advisory has been dedicated to assisting clients in recovering their financial assets, be it physical assets, unclaimed insurance, or funds in inoperative bank accounts. Our process begins with a complimentary evaluation of the client’s papers, ensuring we charge nothing upfront for case assessment. If our team finds the case feasible, we proceed to a formal mandate agreement, incurring only a minimal mandate signing fee. Our main compensation is a success-based fee, a percentage of the total recovered amount, commensurate with the investment’s value. Clients are responsible for any legal expenses, such as succession certificates or stamp duties. Beyond these and the small initial fee, our charges are solely success-based, ensuring our goals align with our client’s financial recovery,” said Vikash.
Use of technology
Technology can immensely help platforms to recover their client’s unclaimed investments.
“At Recoversy, we ourselves have leveraged cutting-edge AI technologies to revolutionise the identification and claiming of unclaimed investments. The integration of AI into our system has proven instrumental in sifting through vast repositories of unclaimed data with unmatched efficiency.
By employing advanced algorithms, we can swiftly track down investments linked not only to the individual directly but also those associated with their family members, which most of the time comes as a surprise to our client; how we can know their family members and this last addresses without even telling us. This comprehensive approach ensures that no potential assets are overlooked, offering a more exhaustive search process. We are actively working on implementing AI-driven solutions that streamline and enhance our recovery procedures.
This strategy is designed to maximise the speed and accuracy of our services, ultimately benefiting our clients by increasing the overall value of unclaimed investments we can uncover on their behalf,” said Shreyash.
Deadline for claiming assets
No regulator or public authority has issued any circular or formal notification regarding confiscating these assets, except for certain rules pertaining to unclaimed deposits.
“At present, shares can be claimed at any time without a time limit. However, for other investments like insurance, PF, bank accounts, and postal savings, the government has implemented a timeline. After 10 years of being unclaimed, the funds are transferred to a separate fund. Then, the government waits an additional 15 years. After a total of 10 + 15 years, generally, for all financial instruments, the funds become inaccessible, and the government utilises them for the senior citizen welfare fund i.e. PF, EPF and insurance and DEA (in case of bank account),” said Vikash.
“If someone doesn’t claim back their unclaimed assets, they continue to be in the custody of the requisite Government body like the IEPF Authority, SCWF, RBI etc. Until the government creates any new law, the said unclaimed investments can be claimed back by the concerned investor,” said Ankit.
Prevention of investments from becoming unclaimed or lost
Shreyash believes that it is important for investors to make their nominees aware of their investments and have one phone and email address across different investments.
One practical approach is to maintain a comprehensive record of all investments, regularly updating a centralised document that includes details such as asset types, account numbers, and relevant contact information. This document should ideally be shared with at least one trusted family member or friend, ensuring that someone close is aware of the investment portfolio.
Additionally, it is prudent to streamline communication channels by using a single email address and mobile number across all assets. This practice facilitates efficient tracking and correspondence related to the investments. Merely updating nominee details may not be sufficient unless the designated person is aware of the specific investments involved. Therefore, maintaining clear and accessible records becomes crucial for effective communication and resolution.
For added security, consider establishing joint holders for accounts and investments. This strategic approach simplifies the recovery process in the unfortunate event of an untimely demise, ensuring that the transition of assets is smoother and less burdensome for surviving family members. By implementing these proactive measures, individuals can significantly reduce the risk of their investments becoming unclaimed or lost, contributing to a more secure and well-organised financial future,” said Shreyash.
Claim process for NRIs
People who have moved abroad can also claim back their unclaimed deposits/investments in India by following the due procedure.
“In case the investors are residing abroad, they have to send their KYC documents, OCI/PIO card, foreign address proof, old Indian address proofs, etc., to prove their credentials to the concerned companies/authorities,” said Ankit.
“For Non-Resident Indians (NRIs) living abroad, all the important papers, like KYC details, passport, PAN, and address proofs, need to be notarised or apostilled from their country of residence. Now, NRIs have two options for this paperwork adventure. They can either go to the Indian embassy to get things sorted there, or they can take the local route and get documents notarised by a nearby notary. Moreover, NRIs need a PAN card and they need to open an NRE or NRO bank account and a corresponding demat account in India,” said Vikash.
Taxation
No taxes are involved when claiming back one’s own investments or those of a deceased individual. The only instance where taxation comes into play is when the reclaimed shares are sold, and capital gains tax becomes applicable. The specific tax implications are determined based on whether the gains are categorised as long-term or short-term, as per the income tax rules.
From these two parts, we can conclude that the journey to claiming unclaimed investments is layered with various facets. It might be easier to make a claim for people with documents in place, but it might be difficult to claim investments done by the claimant’s deceased parents who don’t have access to documents. In these cases, recovery platforms make it easier for people to get their rightful share. Moreover, it is important to stay patient, especially for complicated cases, as it might require almost four years to get claims.
Padmaja Choudhury is a freelance financial content writer. With around six years of total experience, mutual funds and personal finance are her focus areas.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!
Download The Mint News App to get Daily Market Updates.
More
Less
Published: 29 Jan 2024, 03:50 PM IST
