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SEBI Extends Demat and Mutual Fund Nomination Deadline to June 2024

SEBI has extended the deadline for linking demat accounts and updating mutual fund nominations to June 2024, providing investors additional time to comply with these regulatory requirements.

  • 3,214 Views | Updated on: Apr 24, 2024

In a move aimed at enhancing investor protection and promoting financial security, the Securities and Exchange Board of India (SEBI) has recently announced the extension of the deadline for demat and mutual fund nominations.

According to a circular released, SEBI has prolonged the deadline until June 30, 2024. By this date, investors must either designate nominee(s) or explicitly decline nomination by submitting a declaration. Therefore, it is crucial for investors to indicate their ‘nomination choice’ in their mutual fund or demat account before June 30, 2024, to prevent the account from becoming inactive and frozen.

The SEBI circular stated, “In response to representations received from market participants and to facilitate compliance and enhance investor convenience, the deadline for submitting the ‘choice of nomination’ for Demat accounts and mutual fund folios has been extended to June 30, 2024.”

What is the New Deadline to Add Nominees?

According to a circular released, SEBI has prolonged the deadline until June 30, 2024. By this date, investors must either designate nominee(s) or explicitly decline nomination by submitting a declaration. Therefore, it is crucial for investors to indicate their ‘nomination choice’ in their mutual fund or demat account before June 30, 2024, to prevent the account from becoming inactive and frozen.

The SEBI circular stated, “In response to representations received from market participants and to facilitate compliance and enhance investor convenience, the deadline for submitting the ‘choice of nomination’ for Demat accounts and mutual fund folios has been extended to June 30, 2024.”

SEBI has previously extended the nominee deadline, with the initial deadline set at September 30, 2023, before being pushed to December 31.

Why is Adding a Nominee Important?

A nominee plays a crucial role in transmission, facilitating the transfer of assets to the next of kin in the event of the investor’s demise. The absence of a nominee can complicate the transmission process significantly. Therefore, as an investor in stocks or mutual funds, designating a nominee is essential for ensuring the smooth transfer of your invested funds to the chosen individual.

It is important to note that only individuals applying for or holding units on their own behalf, either singly or jointly, can make nominations.

How to Add a Nominee?

To add a nominee for your Mutual Fund investments, one can take the common nomination form for mutual funds provided by the AMCs and add the required details. One can add up to three nominees.

  • Name of the nominee
  • Date of birth of the nominee
  • Nominee’s relationship with the investor
  • Address of the nominee
  • Percentage share of each nominee (if there is more than 1 nominee), etc.
  • If the investor does not specify the percentage share, the Mutual Fund units will be equally distributed among all the nominees mentioned in the nomination form.

The nomination has become mandatory for demat accounts, where individuals can either nominate or explicitly opt-out. NSDL offers an online nomination facility for NSDL demat account holders (applicable for single demat account holders and resident individuals). Here is a step-by-step guide:

Step 1: Enter < DP ID > + < Client ID > + < PAN >. Receive an OTP on the mobile number registered in your Demat account.

Step 2: Choose between < Nominate > OR < Opt Out >.

Step 3: Electronically sign using AADHAAR, with an OTP sent to the mobile number registered with UIDAI (AADHAAR).

Why the Nomination Process is Crucial?

SEBI has previously stated that if investors fail to meet the nomination deadline, they can halt debits from their holdings. This implies that individuals cannot withdraw or access their mutual funds accounts, and their demat accounts will not be available for stock trading.

By bypassing the nomination procedure, the investments can smoothly transition to the designated beneficiaries in the event of any unfortunate incident. Without a nomination, the deceased’s family members may find themselves entangled in prolonged and expensive legal processes to gain control of the investments.

Final Thoughts

SEBI’s decision to extend the demat and mutual fund nomination deadline to June 2024 is a positive step towards creating a more investor-friendly landscape. This move provides investors ample time to comply with crucial regulations and underscores SEBI’s commitment to investor protection and financial well-being. As the regulatory body focuses on education and awareness, investors are encouraged to take advantage of the extended deadline to ensure their financial assets are secured and seamlessly transferred to their intended beneficiaries.

Key takeaways

  • SEBI has extended the deadline for linking demat accounts to Aadhaar and updating mutual fund nominations to June 2024.
  • Investors now have more time to link their demat accounts to Aadhaar, complying with SEBI’s regulatory requirement.
  • The extension also applies to updating nominations for mutual fund investments, offering investors flexibility and a longer timeframe.
  • The extension showcases SEBI’s willingness to adapt to investor needs, demonstrating a responsive and flexible regulatory approach.
  • Investors should stay informed about any additional guidelines or clarifications from SEBI regarding the extension, ensuring adherence to the latest regulatory updates.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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