The IPEF authority, which falls under the Ministry of Corporate Affairs (MCA), plans to introduce a green channel through which investors will be able to instantly verify their know your customer (KYC) documents on the IPEF portal. This can be done by virtual verification of documents, such as the Aadhaar card or the passport.
As soon as the e-verification is done, the portal will approve the transaction and instructions will be sent to the depositories for the transfer of shares back to the investor account.
According to the rules, any shares where the owner has not claimed the dividend for seven consecutive quarters will be automatically transferred to the IPEF account. Further, the dividend dues of these shares are transferred into the central government’s account. Investors can even reclaim this dividend by putting in an application with the IPEF.
“The green channel will cut down the time for reclaiming the shares significantly as until now, approvals were given manually. But with e-verification in place, there would be no need for such approvals,” said the government official cited above. “IPEF is in talks with the depositories on implementing the system, and whether there is any possibility of further easing the process.”
However, the waiting period for investors to reclaim dividends would not shrink immediately. “Dividends, unlike shares, are transferred into the government account, so we have to put in a request for every such applicant,” said the official.
The instant approval system is expected to benefit thousands of retail investors who often have small portions of unclaimed shares. In most cases, the bank account linked to the demat shares turns inactive due to which the shares and dividends become unclaimed. This is because investors who purchase a small number of shares and who don’t trade in the market regularly forget to update their bank details. In certain cases, the shares may go unclaimed if the investor has not updated his KYC information.
