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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Investor Services

An investor's unclaimed redemption proceeds remain unpaid with a mutual fund because the cheque was never encashed. Which statement reflects the SEBI-prescribed practice for such unclaimed amounts?

Unclaimed redemption or dividend amounts must be parked in a separate plan of a liquid or money market scheme, and the investor receives the amount along with returns earned. The AMC cannot forfeit it, pay it to a distributor, or transfer it to a fund after 30 days.

  1. AThey are forfeited by the AMC as income after one year
  2. BThey are kept in a separate plan, invested in money market or liquid schemes, and the investor is paid based on that investment's returnCorrect
  3. CThey are paid to the distributor as additional commission
  4. DThey are permanently transferred to the SEBI Investor Protection Fund after 30 days

Explanation

SEBI requires unclaimed redemption and dividend amounts to be deployed in a separate plan of a liquid or money market scheme, with the AMC making efforts to trace the investor. The AMC cannot forfeit them or give them to the distributor. The 30-day transfer is not the prescribed rule.

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