Mutual Fund Nomination: Sebi Makes This Big Change For Joint Accounts, Check Details Here

Capital markets regulator Sebi on Wednesday made the nomination optional for jointly-held mutual fund accounts in a bid to promote ease of doing business.

This comes after a working group constituted by the Securities and Exchange Board of India (Sebi) reviewed mutual fund regulations and recommended measures to promote the ease of doing business.

Also Read: Mutual Fund Account Frozen? Know Who Will Do Re-KYC Online and Offline, Check Details Here

Based on the recommendation of the working group, a public consultation was carried out suggesting the option to make joint mutual fund account nominations optional and permitting fund houses to have a single fund manager to oversee commodity and foreign investments.

“Accordingly, it has been decided that the requirement of nomination … for mutual funds shall be optional for jointly held mutual fund folios,” the Sebi said in a circular.

Benefits

Experts believe that the relaxation of nomination requirements for joint holders is beneficial as it simplifies the process of nomination by allowing the surviving member to become the nominee. This streamlines the transmission process and reduces hassle in such situations. Later, the last surviving member can assign a nominee.

Mutual Fund Nomination Last Date

Sebi has set June 30, 2024,  as the deadline for all existing individual mutual fund holders to nominate or opt out of nomination. If they fail to comply, their accounts will be frozen for withdrawals.

Why Nomination Is Important?

Nomination plays a crucial role in ensuring a smooth and hassle-free transition of your mutual fund investments to your loved ones in the event of your unfortunate demise.

With a nominee named, your designated beneficiary can claim the mutual fund units much quicker compared to the process without a nominee. This can provide much-needed financial security to your family during a difficult time.

A clear nomination minimises the chances of disagreements among family members regarding the rightful ownership of your mutual fund investments.

Your nominee submits a claim form along with basic documents like the death certificate and nominee KYC proof. The process is relatively faster.

In the absence of a nominee, legal heirs will need to go through the probate process, which can be time-consuming and complex.