India’s securities regulator, SEBI, has introduced a streamlined system to verify and report investor deaths, aimed at easing asset transfers in the market.
This new system becomes operational from January 1, 2024.
SEBI’s recent circular provides guidance for registered intermediaries dealing with investors and account holders.
Steps for Investor Death Verification
When an investor’s death is reported, the intermediary must first request a death certificate and the investor’s PAN card.
They can complete this process online or offline.
Following this, they should acquire proof of identity, the relationship with the deceased investor, and details of the notifier.
KYC Status Modification
If the investor’s death certificate isn’t received promptly after the report of death, the investor’s KYC status will be temporarily marked as ‘on hold.’
This status will remain until the death certificate is obtained.
The KYC Registration Agency (KRA) will handle the modification of the investor’s KYC status, changing it to ‘Investor’s death information received’ and indicating ‘Death certificate verified.’
Impact on Debit Transactions
Once the KYC status is updated, debit transactions will be blocked in all the investor’s accounts. However, if the account was being operated jointly or in Survivor mode, its operation can continue.
Standard Operating Procedure (SOP) for Associations
Stock exchanges, depositories, and AMFI are required to collaborate in creating a standardized operating procedure (SOP) for this process, providing relevant information to investors. This new SEBI initiative is set to simplify and expedite the transfer of assets in the securities market, making the process more efficient for investors and intermediaries alike.