Earlier this year, Harsh Roongta, a registered investment advisor in India’s financial capital, Mumbai, stumbled upon a hidden treasure. His aged father, he discovered, had HDFC Bank’s unclaimed shares worth Rs 3 lakh (~$3,500). After doing some more digging, he found that two of his cousins also had unclaimed shares worth more than Rs 30 lakh (~$36,000) and Rs 60 lakh (~$72,000).
These are all housed with the Investor Education and Protection Fund (IEPF), run by the IEPF Authority (IEPFA), a government body under the ministry of corporate affairs (MCA).
Dividends declared by companies but unclaimed by investors for seven years are transferred to the IEPF. Not just that. A rule change in 2016 meant that shares attached to all such unclaimed dividends would also be moved to the fund. Besides, unclaimed interest on bonds and unclaimed bonds, among other investments, are shifted to the fund.
In essence, the IEPF is a mighty mountain of unclaimed money. It held a sizable Rs 18,433 crore (~$2 billion) as on 31 March 2021, the IEPFA said in August, in response to Right to Information (RTI) (RTI) Moneylife Investor's Education and Protection Fund Accumulated Rs18,433 Crore, 530mn Shares in FY21: RTI Read more queries filed by public-policy activist and entrepreneur Aakash Goel.
But the IEPFA’s annual accounts, tucked away on its website, show a much higher value of funds—Rs 38,283 crore ($4.6 billion) as of March 2021. The reason for the discrepancy is unclear. The IEPFA did not respond to a detailed set of queries sent by The Ken.
“In RTIs, there could be a gap between what was asked, what was understood, and what was responded to. One might need another RTI query for clarification,” quips a market expert, only half in jest.
All experts The Ken spoke to think that the current value of the fund could be even bigger—about Rs 50,000 crore ($6 billion) at the lower end of the estimates. For perspective, if it were a listed entity, the IEPF would count among India’s top 100 companies by market capitalisation.
The ‘unclaimed money’ is an outcome of many factors. For instance, investors not updating their addresses, legal heirs being unaware of investments, closure of bank accounts linked with demat accounts, etc. The IEPFA, on its part, is meant to conduct investor-awareness and protection programmes, and return the money to the investors or their legal heirs. On the latter, at least, its record so far has not been much to write home about.
The money in the IEPF belongs to investors who can claim it back.