ATM :: Do you deserve the money you have?

Kartik Jhaveri | Mon Sep 03 2012, 09:59 hrs | Indian Express


MF A popular mutual fund has about R35 crore in unclaimed redemptions and unclaimed dividends as per report dated July 2012. A listed blue-chip public limited company has about R70 crore worth of share dividend lying unclaimed as on July 2012. Just one mutual fund and just one listed company and we can see about R100 crore unclaimed.

There are about 40 mutual funds registered in India, over 2,000 listed companies on the Bombay Stock Exchange. Then there are over 100 banks having more than 50,000 branches across India. Could we hazard a guess that money lying across all financial institutions might be in excess of say R5 or R10,000 crore? It could be much more. But that’s not the point. The point of contention is “Why do people create money?”, “For whom is this money being created?”

Why does this happen?

Forgetting our investments: Indeed it’s true; we do forget our investments, we are irresponsible, we hide things from the very people for whom we have created assets. Ultimately all this money lands into some investor education and protection fund and in certain instances your assets may ultimately be transferred to the government.

Changing our details: There are some things we should not change. These days the #1 thing we should not change is the mobile number and the email. It is difficult to remember the number of places we have used these items. The other important thing is the bank account. Avoid changing it. Even if you do not want to use one, keep the minimum balance and hold it for a good few years. You never know how and when you might just need it again. There have to be extremely compelling circumstances for changing these fundamental aspects of your financial life.

Dealing with multiple service providers: In your overtly charitable demeanour you entertain many banks, brokers, agents etc and as a result you have your assets all over the place. Just because he is your brother in law or cousin’s friend or some other relative is not reason enough to deal and render financial favours.

Over time things get out of hand and we tend to brush-off these matters for another day. This day never really comes by. Who is to be blamed for this? Is it the institution, the company, the broker or the agent who brought these things at your door? Over the years you perhaps do not even remember which agent sold you which product? Just think about this; who would you ultimately blame? Often people say that the data profiling exercise they do is one of the best financial activities they have done in so many years. This is because they got an opportunity to consolidate everything they had; or atleast the things they remembered they had.

Here’s another twist to the story; over time people die. Often when they die they leave behind problems that are larger than the assets they created. By the time children come to know, a lot of time has already elapsed. Often when they want to take action they are not able to locate the papers. The following are some activities you may need to do to claim what is yours. Note that you may need to do a combination of some of these in certain cases and in certain cases all of these. Such activities are police complaint, certification of such complaint, indemnity, affidavit, surety, multiple NOC, succession certificate/ probate/ letters of administration, notarising documents, many rounds of letters across institutions etc. Naturally this is not an easy process.

What can you do to avoid such situations?

Plan, and while you plan always consolidate. Consolidation is like housekeeping. It is a nice idea to do this all the time. A good advisor will keep doing this from time to time. He would anyways not allow you to spread so much that you are then not in a position to control effectively. A good idea might be to avoid dealing with multiple providers. 2-3 bank accounts are adequate. 1-2 term insurance policies, 1 health insurance policy, non-life policies as needed, 4-6 equity mutual funds, 2-3 debt mutual funds, 10-20 equity stocks, some bonds, 2-3 properties. This is quite a bit already. You can pretty much spend your life across these assets.

How to claim?

Sometimes the process is quite simple i.e. as simple as writing an email/ letter. Sometimes it could take years. Everything is situation specific. The more the changes vis-à-vis records maintained by the institution, the longer it takes to fix matters. The amount of paperwork is also in sync. Basically I reckon if you take care of money; money takes care of you. It is a perfectly symbiotic relationship.

— Author is Director, Transcend Consulting [email protected]

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