Declare nominee by March 31 or risk having your demat, MF folio frozen

The Securities and Exchange Board of India (Sebi) has released a notification stating that retail investors must declare a nominee or opt out of nomination before March 31, in order to continue trading. Mutual fund investors must also comply with the directive for nomination. If they fail to do so, they will be unable to redeem their units from April 1. Fresh or additional purchase and systematic investment plans (SIPs) will, however, continue to get processed. The circular was issued on June 15, 2022.

Sebi had mandated the submission of nomination details or declaration for opting out of nomination for investors opening new demat accounts on or after October 1, 2021. It has already extended the March 31, 2022 deadline by a year.

Appointing a nominee is vital as it protects the family of a person who has passed away from a lot of hassles. “If a nominee has not been appointed, the family has to go through a long and tedious process to receive the investments,” says Shrey Jain, chief executive officer (CEO), SAS online, a Delhi-based discount broking firm.

Many investors are facing difficulties in completing the nomination online as they aren't able to do the e-sign process. “This happens if their mobile numbers are not linked to their Aadhaar cards. Other reasons could be that they have provided the wrong email ID or uploaded the wrong documents,” says Jain.

In the case of mutual funds, the online facility can be used only when the investor’s permanent account number (PAN) and either the email ID or the mobile number is registered in the folio. For folios with joint holders, contact details available in the KYC records will be used for joint holders and OTP validation from all the holders is mandatory to update the details online.

According to Deepak Jain, head-sales, Edelweiss AMC, “Information regarding whether you have already appointed a nominee is available on the account statement. This information can also be accessed online from the asset management company or the registrar and transfer agent’s (RTA) website and app.”

What if a person fails to appoint a nominee by March 31? According to Jain, even though there aren’t any clear guidelines in this regard, he believes investors might be able to unfreeze their accounts even after that date. He adds that people who are unable to complete the process online should submit a hard copy of the nomination form.

How to appoint nominee for mutual funds

• If the RTA for your mutual fund scheme is CAMS, go to the following link:  https://www.camsonline.com/Investors/Service-requests/Nomination/Nomination-Opt-in_&_Opt-out
• Link to download for physical submission to AMC/RTA office : https://www.camsonline.com/Investors/Service-requests/Nomination/Nomination_Opt-in_or_Opt-out
• If the RTA is KFintech, go to the following link: https://mfs.kfintech.com/investor/General/NCTNomineeUpdation
• Investor can also login with registered contact details and check or update nominee details across all AMCs and both RTAs using MFCentral

How to appoint a nominee for your stock holdings

• First, log into your trading account at your broker’s website
• Then, go to the "My Profile" section, and then to nominee details  
• Select one of the two options: add a nominee or opt out
• Provide all the personal details of the nominee, such as name, address, and PAN number