The last date for updating nomination details for Mutual Fund (MF) folios is fast approaching. Investors need to understand the nomination process, its significance, and the consequences of missing the September 30, 2023 deadline set by SEBI (Securities and Exchange Board of India).
Understanding the Nomination Process:
Mutual Fund nomination is a crucial process where investors designate a person who will receive their investments in the event of their demise. This nomination process ensures that the nominee can claim the investment smoothly without encountering legal hurdles.
SEBI Circular and Deadline Extension:
SEBI extended the deadline for current qualified trading and demat account holders to nominate a beneficiary for their accounts to September 30, 2023 in a circular dated March 27.
As a result, the deadline for updating trading, demat, and Mutual Fund (MF) folio nomination details is September 30, 2023.
All existing individual mutual fund unit holders must nominate or opt out of nomination by September 30, 2003. According to the registrar and transfer agent (RTA) CAMS, up to 25 lakh PAN holders have yet to amend their nomination details. This signifies that these PAN holders have yet to choose a nominee or opt out of having their MF folios nominated.
What happens if MF investors fail to add a nominee?
The deadline for all current mutual fund folios, including those held jointly, is September 30, 2023, after which the folios will be blocked for debits. In simple words, if you do not make a nomination in your existing folio, it will be locked, preventing investors from switching or redeeming shares.
Why is it important to add nominees to your folios?
When a nomination is registered, it facilitates the smooth transfer of cash to the nominee in the case of an investor’s death. In the absence of a nominee, the heirs/claimants must present a slew of paperwork, including a will, legal heir certificate, NOCs from other legal heirs, and so on, in order to have their units transferred into their name.
How do you make a nomination?
If you have an offline account and haven’t updated the nominee yet, you can do so by completing a nomination form, signing it, and submitting it to the registrar and transfer agency (RTA) or mutual fund house. For those who have opened mutual fund accounts online, check your mutual fund statement to see if your folios have a nominee in place.
Existing mutual fund investors can submit nominations (or opt out of nominations) on investing platforms, using a two-factor authentication login. If you initially opened your account offline, complete the nomination form, sign it, and submit it to the RTA or mutual fund house.
Conclusion: As the September 30, 2023 deadline looms, it’s crucial for Mutual Fund investors to act promptly and update their folio nominations. Failure to do so can lead to inconveniences and restrictions on fund transactions. Adding a nominee is a responsible and prudent step to ensure the seamless transfer of assets to your chosen beneficiary in case of unfortunate events. Don’t miss the deadline; secure your investments now.
Author Bio
Similar to Nomination by Individuals Nomination by HUF Karta also must be permitted as it is all within a joint family. Upon the expiry of my elder brother when I became the next Karta as per the co parceners list given at the time of opening the account, the MF are asking for Indemnity Bond of Rupees 500 and many other formalities. You should as an active CA take it up with the concerned persons. As well as if the nominee predeceases the Investor there must be a second nominee option as no one can predict the future.