According to the annual report of the Securities and Exchange Board of India (Sebi), unclaimed money under mutual funds rose 10.4% between March 31, 2025, and March 31, 2026, to ₹3,811 crore. As reported by Business Standard, this represents a significant increase from the previous year's amount of ₹3,452 crore, though the pace of increase has nearly halved compared with the previous year. The growth rate has slowed substantially from the 21% increase recorded between FY24 and FY25. The latest data shows that in FY24, ₹2,862 crore of investors' money was lying unclaimed with mutual fund companies, indicating a consistent upward trajectory despite the slowing growth rate.
According to Manish Srivastava, executive director at Anand Rathi Wealth, the increase was mainly due to unclaimed dividend amounts, which stood at ₹2,689 crore, up 15.7% from the previous year. Unclaimed redemption proceeds stood at ₹1,122 crore, showing a marginal decline from last year. As reported by Business Standard, the unclaimed money comprises both unclaimed dividend amounts and unclaimed redemption proceeds, with the former being the primary contributor to the overall increase. The breakdown shows that dividend amounts continue to be the largest component of unclaimed funds, while redemption proceeds have shown a slight decrease, contributing to the overall growth rate slowdown.
As reported by Business Standard, unclaimed amounts in mutual funds are not caused only by investor negligence but also by technical and procedural issues. AK Nigam, director at BPN Fincap, explained that unclaimed amounts usually arise when money payable by an asset management company does not reach the investor's bank account or remains unencashed. Srivastava noted that a common reason is when investors change their contact details but do not update them with the mutual fund company or registrar and transfer agent, resulting in payment failures. The growing size of the mutual fund industry, with 27.86 crore folios now active, means that even a small proportion of old or inactive records can add up to large unclaimed amounts. Physical cheques or demand drafts issued for dividends or redemptions can also expire if not deposited in time, moving the money into the unclaimed pool.
According to Business Standard, once an unclaimed mutual fund amount is identified, investors need to complete several steps to recover the money. The process involves updating KYC and bank details, filling required forms, and submitting supporting documents to the AMC's Investor Service Centre or RTA branch. If the claim is made within three years, investors receive the original unclaimed amount along with income earned from liquid or overnight schemes. After document verification, the amount is credited directly to the investor's bank account. If the claim is made after three years, the investor receives the original amount along with income earned up to the end of the third year, with earnings after the third year transferred to an investor education fund in line with Sebi rules.
As reported by Business Standard, for original investors, key documents include a duly filled Release of Unclaimed Amount Form, self-attested copies of PAN and Aadhaar, passport or voter identity card, and bank proof. Bank proof is mandatory and must include an original cancelled cheque or bank statement not older than three months. In case of death, nominees must submit a transmission request form along with the original death certificate and self-attested copies of PAN and bank proof. The claimant must also provide proof that KYC has been completed, with the investor providing an original cancelled cheque carrying the investor's name and bank account number, or a copy of a bank statement or passbook not older than three months, verified by the bank manager.
