Nomination for Mutual Funds: Mutual fund investors and demat account proprietors must nominate someone in their demat account by September 30, 2023. The markets regulator Sebi has mandated that all demat account holders submit nomination declarations by September 30 or opt out of nominations. Here is a detailed guide on how to nominate or decline a nomination.
In a circular dated March 28 of this year, the Securities and Exchange Board of India (Sebi) stated, “Based on representations received from market participants, it has been decided that the provision mentioned in paragraph 4 of SEBI circular dated June 15, 2022, regarding the freezing of folios shall come into effect on September 30, 2023, rather than March 31, 2023.”
According to this, failure to nominate may result in your mutual fund folio being frozen.
The records of the registrar and transfer agent (RTA) CAMS indicate that approximately 25 lakh PAN holders have not updated their nomination information.
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What Does Nomination Entail?
You can designate any of your loved ones (only individuals) to inherit the securities held in your demat account upon your passing.
Who may make nominations, and who may be nominated?
Individuals with a demat account can nominate. An Indian non-resident may also nominate. A nominee may also be an NRI.
Non-individual entities such as Trusts, corporations, and partnerships cannot nominate. Non-individuals cannot be candidates.
Similarly, proprietors of power of attorney cannot nominate.
A minor is also prohibited from nominating. Nonetheless, a minor may be nominated.
Can You Alter Candidates?
Yes, an account holder can alter a nominee at any time.
How Many Candidates Can You Nominate?
You may appoint up to three candidates.
What Is the Difference Between Opt-In and Opt-Out Nomination?
Opt-in signifies that you intend to nominate nominees for your demat account. Opt-out nomination indicates a refusal to nominate. Although the option is available, it is advised to nominate a beneficiary in your demat account.
How to Nominate: A Step-by-Step Instruction Manual
You may submit nominations both online and offline. You can also nominate offline via the offline approach by submitting the nomination form to the DP branch.
For the online method, you must access the web portal of your intermediary or the NSDL web portal.
Step 1: Visit NSDL’s portal — https://nsdl.co.in/
Step 2: Click on the ‘Nominate Online’ option given on the homepage
Step 3: Enter your DP ID, client ID, PAN, and submit OTP
Step 4: Select the option ‘I wish to Nominate’ or ‘I do not wish to nominate
Step 5: If you choose ‘I wish to Nominate’, a new page will open. Enter the Nominee’s Details
Step 6: On the eSign Service Provider’s page, enable the checkbox and click on ‘Proceed’
Step 7: Validate OTP
After submitting the OTP successfully, you will receive confirmation. The nomination will be updated in your demat account upon DP’s confirmation.
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