Sebi Extends Public Comment Deadline on Unclaimed Funds and Securities to March 31

The Securities and Exchange Board of India (SEBI) on Friday announced an extension of the deadline for submitting public comments on its proposed guidelines for the treatment of unclaimed funds and securities lying with brokers.

Initially, the markets regulator had sought comments by March 4, 2025, but has now extended the timeline to March 31, 2025. The decision was made to allow stakeholders more time to provide their feedback on the consultation paper floated on February 11, 2025.

Proposed Guidelines for Unclaimed Funds and Securities

In its consultation paper, SEBI outlined a framework for handling unclaimed funds and securities.

According to the proposal, if funds or securities cannot be credited to a client’s bank account or Demat account in the normal course of business, or if the client is unreachable, such accounts will immediately be placed under ‘enquiry status’.

Trading members (TMs) are required to make efforts to contact the clients through letters, emails, phone calls, or any other feasible means.

Upstreaming of Funds and Classification as Unclaimed

SEBI has mandated that trading members must upstream such funds to clearing corporations by existing upstreaming guidelines. Funds in client accounts under ‘enquiry status’ will be classified as ‘unclaimed funds’.

Similarly, client securities that remain under ‘enquiry status’ or lie with the trading member for more than 30 days will be termed as ‘unclaimed securities’.

Tracing Clients and Disclosing Information

The regulator emphasised the need for brokers to take proactive measures to trace clients whose funds or securities are classified as unclaimed. In cases where clients cannot be located, brokers are required to contact the client’s introducer, nominee, employer, or any other related person whose details are available.

However, SEBI clarified that brokers must not disclose any financial or holding details of the client during this process.

Objectives of the Guidelines

The proposed guidelines aim to ensure that unclaimed funds and securities are handled transparently and systematically, protecting the interests of investors while maintaining the integrity of the market. The extension of the comment period reflects SEBI’s commitment to incorporating stakeholder feedback before finalising the rules.

Stakeholders, including brokers, investors, and other market participants, are encouraged to submit their comments by the revised deadline of March 31, 2025. The final guidelines are expected to bring greater clarity and accountability to the treatment of unclaimed assets in the securities market.

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