Partner Channels: Bill Pay | Health | IT Education | Jobs | Technology | Travel
July 25, 2001
|
|
|
|
|
|
||
|
Channels: Astrology | Broadband | Contests | E-cards | Money | Movies | Romance | Search | Wedding | Women Partner Channels: Bill Pay | Health | IT Education | Jobs | Technology | Travel |
||
|
|
||
|
Home >
Money > Business Headlines > Report July 25, 2001 |
Feedback
|
|
|
MFs want to use unclaimed dividends to prop NAVJanaki Krishnan Some mutual funds have made an informal proposal to the Securities and Exchange Board of India to let them factor unclaimed dividends into the net asset value of a scheme till such time a claim is made. Sebi is said to be seriously considering the idea and has asked the mutual funds to make a representation to it through the Association of Mutual Funds of India. "It will carry more weight if it is done through an industry association," a Sebi official said. The area of unclaimed dividends is a nebulous one. At any given time, mutual funds have substantial amount of unclaimed dividends, running into tens of million, lying with their banks. The payment of dividends is done through banks with whom the MFs have an 'at par' payment facility, provided their branches are networked. Since cheques can be encashed at even remote branches, the controlling office of the bank concerned has a hard time tracking down the actual payout, until reconciliation takes place. While banks freely exploit such cash, mutual funds do not earn anything from it. Therefore, the funds are seeking to plough back the money into their mainstream investments and factor it into their NAV computation. The reasons for unclaimed dividends are manifold. Investors sometimes shift residence due to which the dividend warrant does not reach them in time, while some warrants are lost in transit. Sometimes there is a change in the investor's bank account. In rare cases, it could also be a result of sheer carelessness on the part of the investor. Once the validity period of the dividend cheques lapses, the investor has to make an application to the fund which will verify the records through its registrars (via the banker) and then issue a fresh warrant for the amount. Powered by YOU MAY ALSO WANT TO READ:
|
||||
