The Securities and Exchange Board of India (SEBI) has announced major changes to the nomination process for demat accounts and mutual fund portfolios.
The new rules aim to make investing simpler, improve the nomination process, and reduce the number of unclaimed investments.
The revised regulations will come into effect from September 1.
If you have a demat account or invest in mutual funds, here are the key changes you need to know.
Nomination Becomes Mandatory for New Single-Holder Accounts
One of the biggest changes is that all new single-holder demat accounts and mutual fund folios must have a nominee.
From September 1, investors opening a new account or folio will be required to either:
Add a nominee, or
Officially opt out of nomination by submitting a declaration.
This step is aimed at ensuring investments can be easily transferred in case of unforeseen circumstances.
Investors Can Add Up to Three Nominees
SEBI has also increased flexibility by allowing investors to appoint up to three nominees for a single demat account or mutual fund portfolio.
This gives investors more options when planning the transfer of their financial assets and helps simplify succession planning.
Joint Account Holders Get Different Rules
For jointly-held demat accounts and mutual fund folios, nomination will remain optional.
However, if investors choose to add or change a nominee in a joint account, all account holders must provide their consent.
This requirement will apply regardless of the account’s operating mode.
Nominees Will Have More Flexibility After an Investor’s Death
SEBI has introduced a significant change regarding asset transfers after the account holder’s death.
Under the new rules, nominees will be able to:
Continue operating the existing demat account or mutual fund folio, or
Open separate accounts and transfer their respective share of assets.
This change is expected to make the inheritance process smoother and reduce delays for beneficiaries.
Easier Online and Offline Nomination Process
SEBI has also simplified the process of adding, changing, or removing nominees.
Investors will now be allowed to modify nominations as many times as they want without any restrictions.
Nomination requests can be submitted through both online and offline channels.
Online Verification Options
For online requests, verification can be completed using:
Digital Signature
Aadhaar-based e-sign
Two-factor authentication using OTP sent to the registered mobile number and email address
Simplified Offline Process
For offline submissions, witness signatures will no longer be required if the form is signed normally.
However, if an investor uses a thumb impression instead of a signature, the form must be witnessed by two individuals.
Why These Changes Matter
SEBI believes these reforms will make the nomination process easier and encourage more investors to nominate beneficiaries for their financial assets.
The move is also expected to reduce the number of unclaimed investments and make asset transfers quicker for family members and legal beneficiaries.
To implement the new rules, SEBI has instructed depositories and other regulated entities to upgrade their systems and make the necessary changes before September 1.
For investors, this may be a good time to review existing nominations and ensure their demat accounts and mutual fund portfolios are up to date before the new rules come into effect.
