IEPFA’s digital revamp targets faster claim approval

IEPFA’s search facility for such financial entitlements of investors and their processing will get more technology support to make the process seamless and the technological transformation is likely to be completed by March 2025, two persons aware of the development said.

IEPFA’s new search facility is currently running on a beta or testing and feedback mode. “IEPFA is trying for artificial intelligence-based checking of documents received along with the claim. Also, certain processes manually done will be fully automated," said one of the persons quoted above. 

The infusion of technology will help IEPF meet its target of clearing refund claims within 60 days of receiving a verification report on the investor’s claim and the relevant documents from the company concerned, said the person. 

Incomplete applications can delay disposal of claims, said the person.

The technology revamp is also meant to help claimants avoid private entities that charge a fee to search and claim shares and dividends on their behalf. 

In the FY24 union budget speech, finance minister Nirmala Sitharaman had said an integrated IT portal will be set up for investors to apply for unclaimed dividends and shares.

After the approval of refund by IEPFA, it now takes about 15 days to transfer shares to the rightful applicant and another 15 days for dividend transfers, a time period allowed to check fraudulent claims and to ensure the propriety and integrity of the system, said the person quoted above. 

How does it work now

Current procedure requires investors to upload a form on a website designated by the ministry, send its self-attested physical copy and acknowledgement with an indemnity bond to an officer of the company concerned. The company then has to verify the claim and send it to IEPFA within 15 days, which releases the refund, explained Subodh Dandawate, associate director - regulatory services at Nexdigm, a business and professional services company.

Also read: Can PPFAS lure investors with its tax-efficient ‘debt’ fund?

C.S. Chetan Gandhi of NPV & Associates LLP, a chartered accountancy firm, said that investors should keep track of their shareholdings and companies are required to place on their website a statement of the names, their last known addresses and the unpaid dividend to be paid to each person. Accordingly, investors can check the respective company's websites and reconfirm whether their records or names are there in the unpaid dividend list.

“While claiming any refund, it is advisable that the investor should provide all details of the unclaimed dividend including details of shares along with the bank details where the unclaimed amount should be credited," said Gandhi.

To avoid all these hassles, it is always advisable to hold securities in dematerialized form, which will enable the shareholder to keep a proper track on investments and easily change bank details with the Depository Participant at one place where the demat account is opened, rather than approaching different companies to claim any unpaid dividends in future, said Gandhi.

Dandawate of Nexdigm said that the claim and verification process is a bit complex and many a times professional assistance is required, which comes at a cost. “To overcome practical issues, a single window online claim system would be more beneficial," said Dandawate.

Companies transfer dividends, deposits or other financial entitlements not claimed for more than seven years, to IEPF, the fund managed by the IEPFA, which oversees its transfer to the rightful owners.

Also read: Integrated IT portal to be set up for unclaimed shares, dividend: FM

At the end of FY24, IEPF had over ₹8,100 crore in unclaimed dividends, matured deposits, matured debentures etc, excluding unclaimed shares transferred by companies, minister of state for corporate affairs Harsh Malhotra had informed Parliament in August this year. The value of shares, according to analysts, could be many times more than this.