SEBI proposes new nomination rules for demat, MF accounts: What investors should know

SEBI proposes new nomination rules for demat, MF accounts: What investors should know


Market regulator Securities and Exchange Board of India (SEBI) has proposed a simplified framework for nomination in demat accounts and mutual fund folios, aiming to ease investor onboarding and reduce unclaimed assets.

In a consultation paper released on March 17, the regulator suggested cutting mandatory nominee details to just two fields, name and relationship with the investor.

Other information, such as address, contact details and percentage share, will become optional to reduce friction during account opening.

Nomination to become default for single accounts

SEBI has proposed making nomination the default option for all new single-holder accounts. Investors who do not wish to nominate will need to actively opt out by submitting a declaration, including through an online consent-based mechanism.

For joint accounts, nomination will remain optional. The regulator has also proposed removing the earlier requirement for video-based opt-out, replacing it with simpler digital declarations.

No operational rights for nominees during lifetime

The regulator clarified that nominees will not be allowed to operate accounts during the investor’s lifetime. It has proposed scrapping the earlier provision that permitted nominees to act in cases of investor incapacitation, citing operational challenges and audit concerns flagged by the industry.

Instead, SEBI said investors should rely on the existing power of attorney (PoA) route in such situations. It also reiterated that a nominee acts only as a trustee for legal heirs after the investor’s death and does not gain ownership rights.

Cap on nominees set at four

Rolling back its earlier proposal to allow up to 10 nominees, SEBI has now suggested capping the number at four, in line with banking norms. The move follows data showing limited use of multiple nominees by investors.

If investors do not specify the share for each nominee, assets will be distributed equally among them.

Push to curb unclaimed assets

To address the issue of unclaimed assets, SEBI has proposed that intermediaries send periodic reminders through SMS, emails and platform notifications to investors who have not registered a nominee.

The proposals seek to revise parts of SEBI’s January 2025 circular, which faced industry pushback over high compliance costs and operational complexity.

SEBI has invited public comments on the consultation paper until April 7, 2026.



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