How easy is it to complete the Iepf claim process and get back from shares and/or your shares into your Demat account?

You can find a needle in a haystack, you can find a black cat in a coal cellar or perhaps you can find 32 teeth in a hen’s mouth, but claiming money from IEPF?

IEPF, on 9th Jan 2023, the Iepf Authority issued a consultation paper for simplification of the refund procedure. Apparently, there are lots of complaints. Probably that is why the consultation process is initiated. That paper says it all. As of 30th November 2022, IEPF authority was holding Rs.5,685 crores in dividends and approximately 117 crores shares. We have taken the value of shares that have gone into IEPF authority as reported in their shareholding pattern report in September 2022. We have taken only the companies belonging to BSE 200 Index. This is not the whole universe. We can say that the IEPF authority is already holding at least Rs.70 – 75,000 crores worth of shares belonging to people. The below table shows shares in a dividend that have been transferred at the end of the year.

This is an accumulation over a period of five years. Out of these, how many shares got approved? The same consultation paper provides us with the reply. Till 30th November 2022, only 2.18 crore shares have been transferred. In other words, 2% of claims have been settled over a period of 6 to 7 years. Simple multiplication will suggest 350 years for the complete settlement and hence the need for proper simplification.

What more? More claims are rejected than what is approved. Over a period of 6 years out of a total of 1,05,000 claims, 64,000 claims were settled. Out of these 64, only 31,000 claims are accepted and 33,000 claims are rejected.

The dividend settlement is still worse. As of 30th November 2022. IEPF authority holds Rs.5,700 crores (approximately) in dividends and it has settled Rs.32 crores in 6 to 7 years. Claiming and refund statistics as given by IEPF authority are given below.

The IEPF claim process is as follows:-

1. The process who is making the IEPF claim makes an online application in IEPF Form 5. This will be automatically transferred to the Nodal Officer of the company in the MCA21 portal.
2. The Nodal Officer of the company has to furnish an e-verification report of the IEPF claim within a period of 30 days.
3. Claims are processed in MCA21 by the IEPF authority for online refund. This process is supposed to take two months.
4. IEPF authority then provides approval or they point out discrepancies in the IEPF claim or they together reject the claim. This is a system-generated e-mail.
5. Shares are then refunded through Depository Accounts (popularly known as Demat Accounts).
6. The dividend is then transferred approximately to the bank account.

This seemingly simple process takes forever to materialise. We will see why in our next blog.

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