How to access your unclaimed money
If you or your family have funds lying with financial institutions for a long time, it is time to track and claim your dues.
Crores of rupees in unclaimed money – right from old provident fund amounts when you left your earlier jobs to insurance payouts to share application money and more – is piling up but rightful owners are yet to get their hands on it. Businesses could owe you plenty of money, especially if you have been working for long or investing actively or saving regularly. But it is not uncommon to lose track of that money mostly because investments were made and policies were bought a long time ago, and you have forgotten all about it. As of now, about
1,56,539 crore is lying with various financial institutions as unclaimed money (see table Where Is The Money), with small savings plans, Employees’ Provident Fund Organisation (EPFO) and banks leading the list. The government has, however, started looking at the issue and measures are being taken to transfer it to legal owners or use it for the benefit of the society.
There are several reasons why the money does not get claimed. As mentioned earlier, you might have lost track of the funds owed to you. Or a company/financial institution might have failed to locate you for payment as contact details change over the years but are not updated on a regular basis. Even nominees and legal heirs may fail to stake a claim if they are not aware of such assets – it is often the case if one dies without making a will. “In case of insurance, communications may not reach a policyholder due to change in contact details or bank account details. On the other hand, his/ her family or the nominee may not even be aware that such a policy exists,” says Mohit Rochlani, Director, Operations and IT, at India First Life Insurance. “Money may remain unclaimed if the policyholder has died and the executors are not aware of a nominee,” he adds.
Vikash Jain, Director of Share Samadhan, a Delhi-based company that recovers unclaimed and lost investments, cites one of its cases. Radhika Singh (name changed), daughter of Ranjit Singh from Jharkhand, was not aware of the investments made by her father; neither had she the complete records of those investments. After a few years of her father’s death, she received a letter from ITC containing dividends from some stocks that her father had purchased. She approached Share Samadhan for a full recovery, and the company recovered 1,73,880 shares. The total value of the stocks turned out to be 4.92 crore, and the dividends received amounted to 48.77 lakh.
The procedure to claim your ‘ lost’ money is not too difficult, though. The Reserve Bank of India (RBI) has mandated all banks and financial institutions to publish on their respective websites details of accounts, which have remained inactive or inoperative for 10 years or more. To track if you have any unclaimed fund lying around, run a search on relevant websites and see what turns up. Once you have traced the money, follow the appropriate to-do list below, and you will get it back.
Recovering PF, Pension Money
In May 2016, the government stated that about 43,000 crore was lying in inoperative EPF ( Employees’ Provident Fund) accounts although the definition of inactive account changed post the November 2016 notification. Earlier, if a person stopped contributing towards PF for three years or more, the account became inactive. But now an account is termed inoperative three years after a person’s retirement if he/she is at least 55.
The reason why so much money is lying unclaimed with the Employees’ Provident Fund Organisation (EPFO) is that many people have discontinued their accounts long ago, but their deposits are still earning interest. On the other hand, any unclaimed pension money is also transferred to EPFO accounts, further adding to the cash pile- up.
“People come to claim their old money, but it is a grey area. The identification of the person could be difficult, and we need to cross-check and ensure the same as it is trust money. In most cases, there is no way to ascertain the identity of the rightful owner,” a senior EPFO official says requesting anonymity. Getting the PF money transferred to one’s bank account tends to get complicated, and at times, people just leave it although the amount is growing over the years, the person adds. “Now we are insisting on Aadhaar as it gives us biometric identification of an individual and makes it easier to find the rightful owner.”
For people whose universal ac-
“If no claim is made for 25 years after the transfer to the Senior Citizens' Welfare Fund, the PF money will be transferred to the central government” SURESH AGARWAL, Chief Distribution Officer, Kotak Mahindra Old Mutual Life Insurance
count numbers or UANs are Aadhaarlinked and have been cross-checked by the Unique Identification Authority of India, there is no need to provide any further proof. All claim submissions and fund transfers can be done online.
“Nominees can also claim pension money,” says Jain of Share Samadhan.
The money lying unclaimed is invested just like it would have been for any active EPF account, which means it is not lying idle and earning interest. But the mandate to transfer all unclaimed and unpaid money from inactive accounts to Senior Citizens’ Welfare Fund (SCWF) came in November 2016 although the process has not been finalised yet. As of now, the unclaimed money from these accounts gets transferred to SCWF after 10 years, but it can be claimed back.
“In case no claim is made for 25 years after the transfer to SCWF, the money will be transferred to the central government as per Section 126 of the Finance Act, 2015,” says Suresh Agarwal, Chief Distribution Officer at Kotak Mahindra Old Mutual Life Insurance ( see table How The Money Is Used). How to claim: If your Aadhaar is not linked to the EPF account, you need to fill in the composite claim form available in all PF offices and also on the EPFO website. After it is certified by your employer, submit the form to the PF office. If your EPF account is linked to Aadhaar, the entire process can be done online. Nominees can claim the money by providing proper certifications and proof of ownership.
Insurance Payouts
The unclaimed money lying with insurance companies (both life and non-life) reached around 11,668 crore in March 2016, Minister of State for Finance Santosh Kumar Gangwar stated in a written response to the Lok Sabha. The unclaimed amount in this sector includes death, maturity and indemnity claims, survival benefits and premium refunds which have not been claimed post the due date of claim settlement. Incidentally, the Life Insurance Corporation of India held the biggest chunk of the money, an amount of 5,934 crore as on March 2016, while Birla Sun Life Insurance held around 250 crore.
Much like the EPF, the unclaimed money here is also transferred to SCWF at the end of 10 years from payment due date. However, an insurer will try to contact the policyholder or the nominee before the transfer takes place. “Upon the completion of 10 years from the benefit due date, the
“A policyholder can contact the insurance company and fill up a cheque re- issuance form with NEFT details for claiming the money” ANIL KUMAR SINGH, Chief Actuarial Officer, Birla Sun Life Insurance
“In case of insurance, a policyholder’s family or the nominee may not even be aware that such a policy exists” MOHIT ROCHLANI, Director, Operations and IT, IndiaFirst Life Insurance
money will be transferred to SCWF. But it can be claimed by the beneficiaries till 25 years from the date of transfer to SCWF,” says Rochlani of IndiaFirst.
What you should do: The policyholder or the nominee can claim the money by furnishing all policy details. “A policyholder can contact his/her insurance company and fill up a cheque re-issuance form along with the NEFT details for claiming the money,” explains Anil Kumar Singh, Chief Actuarial Officer of Birla Sun Life Insurance. “In case of a policyholder’s death, the nominee or the legal beneficiary can claim the dues by submitting necessary documents and bank account details,” adds Rochlani.
Bank Accounts and Deposits
Banks had 6,835.40 crore of unclaimed deposits ( more than 10 years old) as in December 2015, which rose significantly from 4,998.27 crore in the year- ago period. During the financial year 2014/ 15, 2,419.48 crore was lying unclaimed as fixed deposit balance, according to the Ministry of Finance.
In March 2014, the RBI declared that unclaimed or unpaid money lying in inactive bank accounts for 10 years or more would be transferred to the Depositor Education and Awareness Fund ( DEAF). The money will be utilised to support knowledge and information- sharing with customers and will also serve other purposes as specified by the RBI from time to time.
Account holders can claim the money even after it has been transferred to DEAF. In such a case, the bank pays the money to the applicant, which is then refunded by DEAF. Total amount payable will include the unclaimed amount plus the accumulated interest paid by that specific bank.
“No charges are levied on dormant accounts anymore,” says Surinder Chawla, Head of Liabilities, RBL Bank. Instead, interest will be paid as per savings account rate of the bank.
How to claim: Depositors, nominees or legal heirs can claim the money by getting in touch with the bank or activate the process on its
aging Director, Hindustan Zinc.
“Zinc has rallied in the short term. It will go for a short correction but the trend is on the higher side,” says Prathamesh Mallya, Chief Analyst, Non-agri Commodities & Currencies, Angel Commodities Broking.
The group is in the process of further mechanisation to reduce production costs further. “Zinc is the bulk of their profits and valuation, especially because of uncertainty regarding sourcing of alumina/ bauxite. HZL is looking good in how they are shaping up mine-metal production. About 2030 per cent jump in production by FY2020 is clearly visible,” says Ankur Kulshrestha, Research Analyst-materials, HDFC Securities.
THE ELUSIVE BAUXITE
While zinc could ring-fence the group from any adversities for a few years, Agarwal needs to sort out the bauxite sourcing puzzle after the Niyamgiri debacle. “In aluminium, since smelting in China is taking a hit and demand is stable, projection remains high,” says Mallya. “All metals will be on the higher side in terms of pricing.”
Vedanta’s bauxite business head Ajay Kumar Dixit explains the dilemma. The group intends to ramp up its aluminium production from 1.7 mtpa to 3 mtpa by 2020. Ramp-up has a significant effect on reducing cost of production. “We break even at slightly lower than $1400. As the plant ramps up, the distribution of asset costs over higher volumes happen and so our break evens would go lower,” says Dixit. “In aluminium, 3 million tonnes of capacity in China will be closed by October/November. It can go up to $2300/2400 from $2050 today. Vedanta fortunes are good because of these two,” says an analyst.
Vedanta would require 6 mtpa of the intermediate alumina and 18 mtpa of raw material bauxite. But its Chhattisgarh mines are producing barely 2-3 mtpa of bauxite. While that is being ramped up to 5 mtpa, Vedanta is still short of 13 mtpa. Even though India sits on the world’s biggest bauxite reserves, Vedanta’s bauxite is being imported from as far as West Africa. And domestic sourcing is nowhere in sight right now. Niyamgiri bauxite ore may never get mined; years of discussion with government-owned Nalco for supply of alumina haven’t reached any conclusion; and, Orissa and the Centre have yet to throw bauxite mines for auction. “Nalco depends on internal policy change. They are selling alumina internationally. We would be open to tak-
ing it. What we know is that they are doing some internal deliberations,” explains Dixit. “Orissa has to give us bauxite. We would be open to take it from wherever they give. In any case, the government will also auction mines. We would prefer it from Orissa but we would take it also from Chhattisgarh.”
TO LEASE OR NOT TO LEASE
If it’s the government that’s the bottleneck in bauxite, in oil it’s for Vedanta to decide whether it wishes to ask for extension of lease for the Rajasthan block for another 10 years or not. The block that contributes nearly 90 per cent of Cairn’s crude production is due for renewal in May 2020. Vedanta would have to put up its expression of interest by May 2018. The price it will have to pay, as per the new licensing policy Hydrocarbon Exploration Licensing Policy ( HELP) is 10 per cent additional profit petroleum, something that Cairn firmly believes is usurious.
In March 2017, the government introduced HELP to double crude production from 80 million metric tons to 150-155 million metric tons by 2022. But existing lease owners will have to shell out more. Vedanta’s Ravva lease extension is due in 2019 and Cambay in 2023.
“It seems that they have said that our Rajasthan Block is part of that policy. We have been under litigation much before this policy in the context that there is the bilateral contract with the government of India and that allows us an automatic extension at the same terms and conditions. The policy has been notified. On the face of it seems to be saying that you have an extension with clauses,” says Sudhir Mathur, CEO, Oil & Gas Business of Vedanta Resources.
The peak tranche as per existing contract was 50 per cent profit petroleum which would now be at 60 per cent. “We feel that’s a bit punitive,” says Mathur. The assumption being that all the investment that needed to be made has been made. Therefore, it is just an operating cost and so the government should collect more. But Mathur says technology is much more expensive: “On one hand if you use technology well of which there have been changes in fracking or 4D seismic, etc you tend to push up your recovery factors quite considerably with a high degree of surety as opposed to taking exploration risk. That high profit petroleum becomes punitive to attract investment which is something government needs to take into account.”
Cairn reckons higher share of profit petroleum may force players to leave oil in the ground if it’s not viable towards the end of the lease period. That’s disastrous for a country that imports 80 per cent of its crude. However, both petroleum minister Dharmendra Pradhan and the regulator DGCA have indicated that tight and tougher reserves may be incentivised. “Then we won’t need to worry about it,” says Mathur.
LIFE BEYOND BUSINESS
“Nand Ghar” is a pre- fabricated house in some 100- odd villages, complete with solar power, hand pump and a TV. It provides nutritious meals to children in the village, health check- up and value- based education via TV. In the afternoon, women are trained in skills and in the evening farming- related information is provided to the villagers. Having tested the pilot in these villages, the 20- 30 lakh house ( excluding land which is the Panchayat’s) is now being rolled out in 4,000 villages simultaneously. Agarwal, a Krishna devotee, couldn’t make it to the birthplace during this visit but on his Mumbai stopover on the way to London a visit to the Siddhi Vinayak temple is a must. Meanwhile, he’s doing the next best thing: setting up “Nand Ghar”. Agarwal wants this expanded to 1 lakh villages.
He has an indelible mark on India’s commodities space. Now, the emphasis is on being a righteous businessman, a businessman with a heart. Agarwal says he’s pledged 75 per cent of his personal earnings every year towards communities. Nand Ghar is one of the biggest initiatives to be funded by this. “My advice to the teams is to see that CSR goes beyond philanthropy and see it’s matched with equal strength with community engagement so we don’t create a dependency relationship between our CSR and those communities. We didn’t see the strategic effects of that (in Niyamgiri),” says Albanese.
A sore point at Vedanta is the government’s indecision on selling the remaining equity stake in Balco and Hindustan Zinc, something Agarwal has tried multiple times. Vedanta had acquired a 51 per cent stake in Balco in 2001 and 64.9 per cent of Hindustan Zinc in 2002-03 under the disinvestment proceedings under the Atal Bihari Vajpayee government.
“Disinvestment of the remaining government stake hasn’t gone very far but it works for smaller investors because the government is also very keen on big dividends,” says Kulshrestha of HDFC Securities. So Vedanta has issued a dividend guidance. “We have committed a minimum dividend of 30 per cent,” says G. Arun Kumar, the group CFO.
That comes on the back of a healthier balance sheet. Thanks to the gold rush, in the past two quarters Vedanta has shed 8,700 crore of debt, leaving it with a gross debt of 80,000 crore and a net debt of 57,000 crore. “All our businesses are delivering IRRs over 20 per cent. Zinc is 40-50 per cent,” says G. Arun Kumar. Between January and July, it has refinanced $3.8 billion in debt, raising the maturity profile from two years to 4.35 years and reducing consolidated cost of borrowings to under 8 per cent for the first time in its history. “I have a Net Debt/EBITDA of less than 1 in Vedanta Ltd. This is by far the best ratio if you look at other groups in India. The focus at Vedanta Ltd is to reduce the gross debt level. We have enough cash.”
It’s hard to believe that barely a couple of years ago the group was saddled with problems. It had $17 billion in debt with an interest outgo of nearly $1 billion per annum. Its $1 billion alumina production facility at Lanjigarh was closed temporarily in 2015 since bauxite could not be mined and, commodity prices barring oil were nose-diving.
With strengthening financials from zinc, aluminium and copper, in particular, no challenge seems insurmoutable for Vedanta.
If this lasts 5-7 years as Agarwal is predicting, expect Vedanta to make more bold bets. That could include an acquisition in steel, with several NCLT-stricken steel assets coming up for bids soon. Expect Agarwal to strike when the iron is hot.
“All our businesses are delivering
IRRs over 20 per cent. Zinc is 40- 50 per cent ... We have committed a minimum dividend of 30 per cent.” G. ARUN KUMAR, Group CFO, Vedanta