To manage unclaimed dividends, AMCs have started introducing separate plans under their liquid funds to deploy the unclaimed redemption and dividend amount. At present three AMCs— Canara Robeco, DSP BlackRock and Invesco have adopted this approach. Canara Robeco has introduced this plan under Canara Robeco Liquid Fund, DSP BlackRock MF launched unclaimed plan under DSP BlackRock Treasury Bill Fund in April and Invesco introduced four separate plans under its Invesco India Liquid Fund.
The legacy of unclaimed dividends is going down, considering all investor information is available with KYC. Moreover, investors have typically started opting for dividends or redemption proceeds to be directly transferred to them into the banks through ECS. However, those who have not opted for such a method to receive their dividends are the ones to whom AMCs send cheques, which on many occasions return owing to change in address of the investors.
This investor-centric measure has come into place following SEBI’s move to allow AMCs to invest the unclaimed redemption and dividend corpus in a separate plan of a liquid scheme which is exclusively for deploying unclaimed amounts from April this year. Further, the regulator capped the TER (total expense ratio) at 50bps for this scheme with no exit loads as a measure to check any possible foul play by the AMCs. Until now, AMCs have been deploying unclaimed dividends in money market securities after a three month gap, which would also find way into bank fixed deposits. To ensure that investors’ unclaimed dividends get deployed meaningfully, SEBI has also asked AMCs to publish names and addresses of investors in whose folios there are unclaimed amounts. Many fund houses have started publishing this information on their websites, including the process entailing claiming such sums.
For investors who have not claimed their dividends within three years, the payment is based on prevailing NAV after adding the income earned on unclaimed money. If investors claim money after three years, the payment is based on the NAV at the end of three years. Effectively, if one makes a claim after the three-year period, there is no additional income that they receive from the AMC. And, the income earned on such unclaimed sums will be used for the purpose of investor education.
olmdesk@outlookindia.com