India’s market regulator, the Securities and Exchange Board of India, has suggested new changes that could make investing simpler and safer.
The regulator has released a consultation paper and is inviting public feedback.
These changes mainly focus on nomination rules for demat accounts and mutual fund investments.
The goal is to make the process easier for investors and bring it closer to banking standards.
What’s Changing in Nomination Rules?
Under current rules, investors can add nominees to their accounts, but the process is quite detailed.
Right now, you need to provide multiple details like PAN, Aadhaar digits, or driving licence, along with contact information and relationship details.
SEBI now plans to simplify this.
In the new proposal, only two things may be mandatory:
Name of the nominee
Relationship with the investor
All other details could become optional, making the process faster and less complicated.
Fewer Nominees, Simpler System
Earlier, investors were allowed to add up to 10 nominees in mutual fund folios.
However, this created operational challenges.
Now, SEBI is proposing to reduce the limit to just four nominees for both demat accounts and mutual funds.
This move aims to make account management smoother and reduce confusion.
Nomination May Become Default
Another important change is that nomination could become the default option when opening a new account.
For existing accounts without a nominee, investors may receive reminders through email and SMS to complete the process.
This ensures that accounts are better prepared for future uncertainties.
Challenges with Current System
SEBI has also highlighted some issues with the existing rules.
Allowing nominees to operate accounts in certain situations has raised concerns like:
Risk of fraud or misuse
Legal disputes
High compliance costs for companies
To address this, SEBI is considering allowing the use of Power of Attorney (PoA) in special cases where the investor is unable to operate the account but is still legally capable.
Final Takeaway
These proposed changes aim to make investing simpler, safer, and more practical.
If approved, investors will benefit from an easier nomination process, fewer complications, and better protection for their assets.
Now, all eyes are on public feedback before SEBI takes the final decision.
